AUTHORIZED     TRANSLATION 


THE 

RULING  CASTE 

&   FRENZIED   TRADE 

IN  GERMANY 

BY 

MAURICE  MILLIOUD 

PROFESSOR    OF  SOCIOLOGY   IN   THE    UNIVERSITY   OF  LAUSANNE 

WITH  AN  INTRODUCTION  BY 
THE  RIGHT  HON.  SIR  FREDERICK  POLLOCK,  BART. 


P.C.,    D.C.L.,    LL.D. 


BOSTON 

HOUGHTON  MIFFLIN  COMPANY 
1916, 


Printed  in  Great  Britain 


CONTENTS 


PAOE 

INTRODUCTION.     BY  SIR  FREDERICK  POLLOCK     .         7 

PREFACE      .  .  .  .  15 

I.  To  AN  UNDERSTANDING  OF  THE  IDEOLOGY  OF  CASTE      23 

II.  GERMANY'S  AIMS  AT  CONQUEST  BY  TRADE  AND  BY 

WAR        .  .  .  .  .       79 

1.  REASONS  FOR  GERMANY'S  ACTION  .        .       79 

2.  THE  ENDS  IN  VIEW  .            .  87 

3.  THE  MEANS  EMPLOYED         .  94 

4.  GERMANY'S  FINANCIAL  SYSTEM  .        .112 

5.  THE  OBSTACLES  IN  HER  PATH  .         .125 

6.  WHY  GERMANY  WAS  ALARMED  .         .141 
INDEX  155 


INTRODUCTION 

SOME  months  ago  it  was  my  good  fortune  to 
bring  M.  Millioud's  work  to  the  notice  of 
English  readers  by  a  review  in  the  Westminster 
Gazette  ;  and  I  am  now  happy  to  contribute  these 
words  of  introduction  to  the  translation,  which  I 
hope  will  make  it  still  more  widely  known.  It 
merits,  hi  my  opinion,  a  high  place  among  economic 
studies  of  the  conditions  leading  to  the  present  war, 
and  that  opinion  has  been  quite  lately  confirmed  by 
the  authority  of  an  eminent  French  historian, 
M.  Jacques  Flach,  who  gives  an  account  of  the  book 
in  the  proceedings  of  the  Academy  of  Moral  and 
Political  Sciences  (Seances  et  Travaux,  November, 
1915).  M.  Millioud's  points  are  no  less  original  than 
important.  He  considers,  in  the  main,  three  ques- 
tions. We  have  to  account  for  the  national  senti- 
ment which  supports  the  German  Government  in 

7 


8        THE  RULING  CASTE  IN  GERMANY 

its  huge  adventure.  For,  if  we  ever  thought  the 
war  was  not  generally  approved  in  Germany,  we 
cannot  think  so  now.  Then  we  must  consider  the 
aims  and  policy  of  German  expansion  in  the  years 
before  the  war.  There  is  much  still  to  be  learnt  on 
this  head.  Some  of  the  shrewder  students  of  affairs 
knew  the  details,  but  the  public  did  not.  Last  comes 
the  question  which  M.  Millioud  thinks  the  hardest 
for  an  impartial  observer.  What  made  the  German 
ruling  classes  decide  that  their  ends  could  not  be 
attained  without  war  ?  A  great  military  establish- 
ment costs  much,  but  actual  war  costs  far  more. 
No  Power  was  willing  to  fight  Germany  without  the 
gravest  cause,  and,  in  spite  of  some  diplomatic 
reverses  by  no  means  of  the  first  magnitude,  Ger- 
many held  the  primacy  among  Continental  nations 
both  in  public  affairs  and  in  trade. 

This  is  not  a  war  of  militarism  alone.  Even  if  the 
Prussian  Junkers  govern  Prussia,  it  is  idle  to  sup- 
pose that  they  control  the  whole  German  Empire. 
It  is  doubtful,  moreover,  whether  even  Prussian 
Junkers  really  like  war  for  its  own  sake.  Certainly 


INTRODUCTION  9 

German  business  men  do  not.  Now  the  modern 
governing  class  of  Germany  is  compounded  of  the 
old  military  and  official  staffs  and  the  men  who  have 
risen  to  wealth  since  the  war  of  1870.  Germany 
had  been  in  the  main  a  rather  poor  agricultural 
country,  and  industry  of  other  kinds  languished  for 
want  of  capital.  Victory  brought  capital,  com- 
merce and  speculation  expanded  by  leaps  and 
bounds,  and  the  aristocracy  was  more  than  willing 
to  share  in  the  new  prosperity.  Militarism  learnt 
to  look  for  speedy  gain,  and  commerce  became  im- 
bued with  the  spirit  of  military  ambition.  The  Pan- 
German  formula,  which  might  otherwise  have  been 
a  mere  literary  curiosity,  was  produced  at  the  right 
moment  to  serve  as  a  watchword  for  this  combina- 
tion ;  a  combination  which,  within  reasonable 
bounds  of  respect  for  other  folks'  rights,  would  have 
been  quite  legitimate,  but  which,  in  fact,  proved 
an  unholy  alliance  for  predatory  conquest.  We  say 
conquest  not  merely  with  reference  to  the  prospect 
of  a  European  war  to  be  waged  for  the  greater 
glory  and  profit  of  Germany — if  necessary.  There 


10      THE  RULING  CASTE  IN  GERMANY 

may  be  plausible  arguments  for  regarding  such  a 
war  as  long  predetermined,  with  only  a  margin  of 
a  few  years  for  the  date  to  be  fixed  ;  I  do  not  think 
them  convincing.  But  in  any  case  the  Germans  were 
unconsciously  making  war,  from  their  point  of  view, 
inevitable.  They  went  forth  to  trade,  but  they 
traded  in  the  spirit  of  warfare,  as  if  no  bargain  could 
be  good  in  which  the  other  party  is  not  visibly 
worsted.  Their  ambition  was  nothing  less  than  to 
make  Germany  the  economic  as  well  as  the  political 
centre  of  gravity  of  Europe  :  so  says  Professor  Ost- 
wald  of  Leipzig,  as  cited  by  M.  Millioud  ;  con- 
descending, nevertheless,  to  allow  the  inferior 
nations  the  use  of  their  contemptible  arts  and 
languages. 

Adventurers  who  go  forth  in  this  temper  in  time 
of  peace  cannot  be  expected  to  be  scrupulous  about 
their  means.  German  influence  and  management 
were,  if  not  exactly  smuggled,  adroitly  conveyed 
into  foreign  business  concerns  all  over  the  world,  as 
often  as  occasion  served,  with  the  result  of  wide- 
spread preference  for  German  products,  amounting 


INTRODUCTION  11 

sometimes  to  artificial  monopolies  of  things  which 
Germany  had  no  superior  natural  faculties  for 
producing.  Competition  was  discouraged  by  bold 
and  systematic  dumping,  of  which  M.  Millioud 
gives  some  striking  examples.  Customers  were 
encouraged  by  long  credit,  while  the  German  pro- 
ducers were  financed  by  German  bankers,  manipu- 
lating inflated  paper  capital  in  the  expectation, 
apparently,  of  making  all  good  out  of  future 
profits. 

But  what  if  the  profits  did  not  come  ?  Germany's 
position  looked  brilliant  a  year  or  two  before  the 
war,  in  commerce  as  well  as  in  European  politics  ; 
M.  Millioud  maintains,  however,  that  it  was  far 
from  being  all  well  with  German  trade,  and  the 
leading  men  of  business  knew  it.  This  is  quite  con- 
sistent with  the  fact  that  some  of  the  financial  and 
industrial  magnates,  such  as  Herr  Ballin,  it  is  said 
on  good  authority,  were  shocked  when  their  Govern- 
ment made  the  plunge  into  war.  Others,  whose  own 
immediate  prospect,  maybe,  was  more  precarious, 
found  the  gamble  tempting,  or  more  tolerable  than 


12      THE  RULING  CASTE  IN  GERMANY 

the  risk  of  a  crash.  Signs  of  resentment  against  the 
methods  of  German  push  were  increasing  ;  com- 
mercial treaties  were  about  to  fall  in,  and,  having 
been  obtained  on  terms  highly  favourable  for  Ger- 
many at  moments  when  pressure  could  be  applied, 
were  not  likely  to  be  willingly  renewed  ;  in  short, 
the  great  commercial  expansion  began  to  be  re- 
vealed as  economically  unsound  over-production 
bolstered  up  by  political  bluff,  and  the  whole  scheme 
of  aggrandisement  seemed  about  to  recoil  disas- 
trously on  its  promoters.  Hence,  in  M.  Millioud's 
judgment,  the  traders  opposed  no  solid  resistance 
to  the  decision  of  the  General  Staff  that,  so  far  as 
military  reasons  were  concerned,  the  auspicious 
moment  for  war  had  come.  It  may  be  thought, 
indeed,  that  the  result  of  the  Balkan  wars  was  quite 
as  much  an  economic  check  to  Germany  as  a 
political  rebuff  to  Austria,  and  that  this  was  the 
more  important  factor  in  determining  German 
action. 

Some  readers  may  think  that  M.  Millioud  has 
rated  the  economical  elements  of  the  problem  too 


INTRODUCTION  13 

high,  and  the  political  and  personal  ones  too  low. 
For  my  part  I  think  his  line  of  argument  sound  on 
its  own  footing ;  and  criticism  will  hardly  be 
profitable  without  fuller  information  than  we  can 
expect  for  some  time  to  come.  It  is  much  to  have 
thrown  light  even  on  one  side  of  the  deplorable 
illusions  which  gave  birth  to  the  war  of  1914. 
Finally,  let  us  not  forget  that  this  judgment  is  the 
judgment  of  a  neutral,  and  that  whatever  censure 
is  conveyed  is  in  the  facts  much  more  than  in  his 

comments. 

FREDERICK  POLLOCK. 


PREFACE 

As  soon  as  we  neutrals  had  recovered  from  the  first 
shock  caused  by  the  outbreak  of  hostilities,  we  asked 
ourselves  what  useful  purpose  we  might  serve. 

It  seemed  our  duty  to  do  our  utmost  to  relieve 
the  distressed — but  that  is  not  enough.  Beyond 
the  claims  of  charity  there  is  a  duty  to  truth  and 
justice.  The  call  of  the  heart  should  never  blind 
one  to  one's  duty. 

It  is  our  part  as  neutrals  to  join  in  a  minute 
investigation  of  the  history  of  the  crisis,  and  to  bring 
to  the  task,  not  cold  indifference,  but  impartial 
judgment,  exact  analysis  and  scientific  precision. 
Our  duty  is  to  see  clearly. 

Those  directly  responsible  for  this  war — the 
leaders — have  incurred  terrible  responsibilities  ;  yet 
it  would  be  childish  to  attribute  all  blame  to  them, 
for  behind  those  who  actually  brought  it  about  are 
all  those  others  who  desired  it,  prepared  for  it  and 
rendered  it  inevitable. 

Who  are  they  ?  How  did  they  spring  up  ? 
What  were  the  steps  that  they  took  ? 

15 


16      THE  RULING  CASTE  IN  GERMANY 

To  answer  these  questions  we  must  seek  to  know 
of  what  nature  are  the  so-called  "  ruling  classes." 
We  must  endeavour  to  see  into  their  minds  and  to 
understand  their  feelings,  their  thoughts  and  their 
aims.  By  so  doing  alone  shall  we  arrive  at  an  under- 
standing of  the  famous  doctrine  of  Pan-Germanism  ; 
a  doctrine  which  had,  before  the  war,  so  firmly 
seized  the  imagination  of  the  German  people,  and 
which  seemed  so  threatening  once  war  had  broken 
out. 

This  doctrine  is  the  mental  expression  of  the 
ambition  of  a  caste  which,  if  it  had  not  invented 
this  particular  formula,  would  have  produced  some 
other,  religious  perhaps,  or  political  or  social ;  or 
would  have  contented  itself,  maybe,  with  some  less 
adroit  pretext. 

It  was  simpler,  however,  to  make  play  with  those 
mental  aspirations  which  the  professors  had  so 
painstakingly  moulded  to  its  use  by  means  of  a 
fantastic  interpretation  of  history,  biology,  ethno- 
graphy and  moral  philosophy.  I  have  attempted 
to  classify  the  main  arguments  with  which  they 
adorned  that  universally  popular  idea  :  the  supe- 
riority of  the  German  race.  It  is  unnecessary  at 
this  date  to  analyse  them  very  deeply  ;  but  what 
is  important  is  to  understand  how  this  doctrine 
has  to  all  appearances,  notwithstanding  the  oppo- 
sition of  the  socialists,  in  spite  of  the  dissimilarity 


PREFACE  17 

between  the  various  states  of  the  Empire,  inspired 
seventy  million  people. 

But  has  it  inspired  them  ?  Is  there  not  something 
else  behind  it  all  ? 

Pan-Germanism  is  the  doctrine  of  a  caste,  and 
this  caste,  in  effect,  dominates  the  Empire.  The 
people  have  not  been  carried  away  by  the  mere 
doctrine,  but  as  the  result  of  a  drilling  which  has 
been  carried  on  for  several  hundred  years,  and 
has  created  in  them  certain  instincts,  perhaps 
ineffaceable  ;  and  strengthened  others. 

One  is  too  apt  to  forget  that  Germany,  unlike 
France,  has  suffered  no  revolution  in  modern  times. 

The  turning-point  in  her  history  was  not  the  year 
1789,  but  1525,  and  that  is  why  I  found  I  had  to 
go  back  to  the  Reformation  in  order  to  account  for 
this  strange  contradiction :  the  unanimity  with 
which  the  German  people  threw  themselves  into 
the  most  formidable  of  adventures  at  the  command 
of  a  caste  which  but  two  years  before — at  the  last 
elections — it  had  consigned  to  a  minority. 

The  composition  of  the  governing  class,  the  chief 
articles  in  the  code  of  its  ambition,  the  reasons  for 
its  power  over  the  masses,  are  the  subjects  of  the 
study  entitled :  "  To  an  understanding  of  the 
ideology  of  caste." 

The  second,  entitled  :  "  Germany's  aims  at  con- 
quest by  trade  and  by  war,"  aims  at  explaining 


18      THE  RULING  CASTE  IN  GERMANY 

the  method  of  action  of  this  caste.  The  beginnings 
of  this  conquest,  which  has  to-day  broken  out  into 
open  war,  originated  in  different  guise  twenty-five 
years  ago. 

It  was  an  attempt  to  inflict  economic  slavery. 
This  will  be  more  clearly  seen  as  records  accumulate 
and  the  machinery  of  contemporary  German  life 
becomes  better  understood. 

The  present  war  with  its  accompaniment  of 
devastation,  looting  and  outrages  :  of  extortion, 
summary  executions  and  deportations,  is  but  the 
natural  consequence  of  what  was  going  on  in  time 
of  peace  under  the  guise  of  friendly  relations.  We 
ask  ourselves,  therefore,  "  Was  the  war  inevitable  ?  " 
Assuredly  no.  One  does  not  necessarily,  in  climbing 
to  the  summit  of  a  mountain,  let  loose  an  avalanche. 
That  depends  on  the  path  chosen. 

If  financial,  industrial  and  commercial  competi- 
tion is  a  species  of  warfare,  it  is,  at  any  rate,  war 
in  a  very  modified  form.  It  does  not  of  necessity 
set  the  nations  at  each  other's  throats  ;  on  the 
contrary,  in  the  opinion  of  many  of  the  greatest 
thinkers,  industrial  and  commercial  expansion, 
among  modern  nations,  ought  to  encourage  peace 
between  them,  by  increasing  international  dealings, 
by  creating  common  interests,  and  by  abolishing 
ignorance  and  prejudice. 

There  is  competition  and  competition. 


PREFACE  19 

We  should  be  very  mistaken  in  generalising  and 
claiming  that  economic  progress  has  of  necessity 
brought  about  rivalry  between  nations,  and  armed 
conflict.  In  some  cases  it  may  be  so — not  in  all, 
certainly  it  is  no  necessary  consequence. 

In  the  present  case  all  the  facts  go  to  prove  it : 
those  who  declared  war  had  premeditated  war. 
They  visaged  war  as  a  final  economic  operation, 
destined  to  perfect  and  bring  all  their  plans  to 
ultimate  fruition. 

If  they  have  been  brought  to  bay,  it  is  not  by 
reason  of  a  war  forced  on  them,  but  as  the  direct 
consequence  of  their  own  schemings. 

What  I  have  attempted  is  to  reconstruct  the  chain 
of  causes  and  effects.1 

Let  economists,  historians,  and  students  of  social 
science  turn  their  attention  without  delay  to  re- 
search on  the  same  lines.  By  collecting  and  sifting 
the  results  of  wide  research,  by  bringing  light,  more 
light,  light  all  the  time  to  bear,  they  will  be  really 
working  together  to  bring  about  that  condition  of 
commercial  morality,  the  principles  of  which  are  not 
yet  defined,  still  less  established  between  nations, 
but  without  which — we  see  only  too  well — war  may 
at  any  moment  bring  to  naught  the  labours  of 

1  In  this  book  I  have  collected  together  and  expanded  studies 
which  appeared  in  La  Bibliotheque  Universette  et  Revue  Suisse  of 
November,  1914,  and  March  and  April,  1915. 


20      THE  RULING  CASTE  IN  GERMANY 

peace,  for  the  reason  that  peace  is  itself  but  the 
shamefaced  masque  of  war. 

Finally,  I  would  ask  my  readers  to  believe  that 
I  have  written  these  pages  without  being  influenced 
by  prejudice,  with  the  one  desire  to  get  at  the  facts, 
and  an  earnest  hope  that  I  may  have  been  able  to 
put  these  facts  clearly  before  unprejudiced  people. 

MAURICE  MILLIOUD. 


TO   AN   UNDERSTANDING   OF  THE 
IDEOLOGY   OF  CASTE 


THE  RULING  CASTE  AND 
FRENZIED  TRADE  IN  GERMANY 


TO  AN  UNDERSTANDING  OF  THE 
IDEOLOGY   OF  CASTE 

HUMANITARIANS,  even  those  sunk  deepest  in  their 
dreams,  acknowledge  with  astonishment  the  evi- 
dence of  the  fact  that  a  European  war  was  possible, 
since  we  are  in  the  midst  of  it ;  even  a  world  war, 
for  peoples  from  all  the  continents  are  engaged  in 
it.  Millions  of  men,  drawn  from  all  the  corners  of 
the  world,  are  lined  up  on  battle  fronts  of  500 — 
no,  more  than  1500  miles.  We  see  before  us  such 
a  shifting  and  displacement  of  masses  of  human 
beings  as  can  only  be  compared  to  the  vast  geo- 
logical upheavals  of  prehistoric  times. 

Then  the  world  was  in  the  making.  Is  it  a  new 
Europe,  are  they  new  social  conditions,  a  new  form 
of  civilisation,  which  are  being  moulded  through 
such  a  vast  disintegration  as  the  mind  can  scarcely 
grasp  ? 

23 


24      THE  RULING  CASTE  IN  GERMANY 

How  much  of  the  old  will  be  built  up  again,  and 
to  whose  lot  will  it  fall  to  rebuild  on  such  vast  ruins  ? 
Well  may  we  wish  to  set  off  against  this  lurid  sight 
that  we  see,  the  certainty  of  future  progress  ;  to 
turn  our  eyes  away  for  a  moment  from  the  smoke 
rolling  upward  from  flaming  cities,  to  shut  our  ears 
to  the  roar  of  exploding  shells,  to  forget  the  war 
and  its  hideous  accompaniment  of  plunder,  en- 
slavement, killing  ;  of  stretchers  laden  with  the 
mangled  and  dead,  trenches  reeking  with  blood 
and  resounding  with  cries  of  agony,  the  destruction 
of  workshops,  the  ruin  of  farm  lands,  shattered 
hearths  where  mourning  sits  face  to  face  with 
misery  ;  well  may  we  long  that  a  ray  of  hope  may 
find  its  way  through  the  shattered  walls,  that  the 
promise  of  liberty  and  justice  may  blossom  forth 
over  the  ruins  of  this  past  world.  Yet  the  hope  is 
so  slight  and  intangible  that  one  hardly  dares  to 
entertain  it. 

We  can,  however,  at  least  try  to  understand  that 
which  we  are  in  no  position  to  prevent.  This  war 
was  not  inevitable,  but  it  had  long  been  fore- 
seen. 

What  forces  were  they  which  affected  so  many 
nations  ?  I  want  to  obtain  a  clear  understanding 
of  the  facts  before  fixing  responsibilities.  Those 
who  loosed  the  dogs  of  war — no  matter  which  nation 
we  consider — all  have  the  unanimous  support  of 
their  own  public  opinion;  and  that  is  perhaps  the 
most  surprising  thing  of  all,  at  a  time  when  business, 


THE  IDEOLOGY  OF  CASTE  25 

social  and  moral  interests  are  so  interwoven  from 
one  side  of  our  globe  to  the  other,  that  even  the 
victor  will  suffer  acutely  by  the  ruin  of  the  van- 
quished. 

What  theories  this  hurricane  strips  from  the  tree 
of  science,  and  sweeps  up  like  dead  leaves  ! 

How  often  were  we  told  that  the  development  of 
trade  and  industry  would  without  fail  be  the  be- 
ginning of  an  epoch  of  peaceful  competition,  the  end 
of  ordeal  by  battle,  an  era  when  arbitration  would 
take  the  place  of  war  ?  Happy  it  is  for  Herbert 
Spencer  that  he  has  not  lived  through  the  days 
which  opened  in  August,  1914,  nor  will  see  those 
still  to  come.  In  them  he  must  have  heard  the 
death  knell  of  his  most  cherished  beliefs. 

The  nations  at  war  proclaim  that  they  were  forced 
into  it ;  that  is  the  least  they  can  say.  But  the 
people  follow  them  of  their  free  will  and  with  en- 
thusiasm. 

Whilst  the  people  as  yet  scarce  realises  the  vast- 
ness  of  the  conflagration,  it  does  not  fail  to  see  clearly 
what  the  immediate  consequences  will  be.  Is  there 
in  man  some  ancestral  instinct — some  atavistic 
savagery  which  reawakes  at  intervals — irresistible, 
the  more  brutal  the  longer  it  has  been  repressed  ? 

The  governments  responsible  fixed  the  day  and 
the  hour  ;  they  would  not,  could  not  have  made  war 
unless  assured  of  national  support.  Public  opinion 
supported  them.  Public  opinion  openly  declared 
against  peace  in  several  other  countries ;  some  as 


26      THE  RULING  CASTE  IN  GERMANY 

yet  are,  thanks  to  the  prudent  guidance  of  those 
in  power,  still  outside  the  conflict. 

What  is  it  that  impels  man  to  give  up  his  leisure, 
to  leave  his  business,  his  home,  the  safety  of  a 
regulated  life,  and  makes  him  so  eager  to  engage  in 
the  bloody  conflict  ? 

This  problem  is  capable  of  various  solutions,  for  the 
reason  that  the  circumstances  differ  with  different 
nations. 

Among  the  Russians,  the  French,  the  English  and 
the  Germans,  there  is  the  same  will.  They  have  not, 
it  would  seem,  similar  ideals. 

My  task  is  to  enquire  into  the  German  frame  of 
mind.  It  is  one  of  singular  interest  by  reason  of  the 
essential  importance  of  understanding  it,  because  it 
is  so  sharply  defined,  and  because  of  the  comparisons 
to  which  it  leads  and  the  thoughts  which  it  suggests. 

Many  facts,  easy  of  proof,  and  mainly  of  recent 
occurrence,  help  one  to  throw  light  upon  it  and  are 
a  guarantee  against  unsupported  conjecture. 

Caste  is  defined  as  a  group  of  men,  united  by 
mutual  interests. 

The  Brahmins  of  India,  the  feudal  Nobility  are 
instances  of  caste. 

I  use  the  word  in  a  general  sense — as  meaning 
very  much  the  same  as  "  governing  class,"  yet  the 
word  "  caste  "  indicates  something  more  definitely 
established  and  distinct.  A  governing  class  is  not 
necessarily  a  caste.  It  becomes  one  when  it  isolates 


THE  IDEOLOGY  OF  CASTE  27 

itself,  makes  laws  for  itself,  grants  itself  privileges, 
reserves  definite  distinctions  for  itself,  and  finally 
places  itself  above  the  rest  of  the  people  as  though 
enjoying  an  independent  existence  within  the 
nation. 

The  Governing  Class  may  be  a  caste  ;  on  the  other 
hand  it  need  not ;  it  may  consist  of  a  caste  added  to 
some  other  component,  or  to  several  others.  It  is 
easy  to  see  the  importance — in  order  to  understand 
the  evolution  of  a  people — of  knowing  of  what 
elements  the  governing  class  is  composed. 

Leading  newspapers  both  in  France  and  England 
have  stated  that  Germany  was  led  into  war  by  a 
feudal  and  militarist  caste  ;  and  this  theory  has 
been  upheld,  in  the  countries  of  the  Triple  Entente, 
by  capable  men  and  even  by  men  of  standing  in  the 
diplomatic  service.  They  claim  that  the  object  of  the 
war  should  be,  so  far  as  the  Entente  powers  are 
concerned,  to  destroy  this  mischievous  caste,  and 
restore  to  the  German  people  its  real  natural  life,  to 
Germany  her  true  spirit.  Once  emancipated  from 
Militarism,  which  binds  her  and  makes  her  a  public 
danger,  no  doubt  that  she  would  gather  herself  to- 
gether to  go  forward  again  with  a  new  destiny  in 
view,  and  would  collaborate  with  all  the  free  peoples 
in  the  peaceful  work  of  civilisation. 

Is  it  with  political  purpose  that  they  have  fancied 
themselves  able  to  distinguish  between  the  German 
people  and  its  leaders  ?  Is  it  in  order  to  shake  her 
confidence  and  to  gain  that  of  neutral  countries  ;  to 


28      THE  RULING  CASTE  IN  GERMANY 

reassure  the  French,  English  and  other  socialists  and 
anti-militarists  ? 

When  people  talk  of  shattering  German  Militarism, 
do  they  propose  that  Germany  shall  be  reduced  to 
impotence  by  reducing  and  putting  a  limit  to  her 
armaments  as  Napoleon  did  in  the  case  of  Prussia 
after  the  battle  of  Jena  ?  Is  it  only  a  question,  in 
order  to  advance  the  democratic  movement  away 
there  beyond  the  Rhine,  of  depriving  the  nobility 
and  Military  Commanders  of  power  ? 

Such  are  the  questions  which  events  alone  may 
solve.  It  is  not  easy  to  see  how  a  feudal  military 
system  can  dominate  in  a  huge  Empire  in  which 
manufacture,  commerce,  trading  in  all  its  branches 
have  become  the  chief  preoccupation  of  seventy 
million  people.  It  is  impossible  to  believe  that  the 
Germans  have  been  rushed — in  spite  of  themselves 
— into  a  war  of  which  they  disapprove. 

They  are  possessed  with  an  intense  enthusiasm, 
and  the  nation's  approval  of  the  adventure  entered 
upon  by  the  governing  class  is  clear  enough  to  make 
one  anxious  to  arrive  at  an  explanation  of  it.  Here 
we  have  a  new  problem  which  makes  the  other  more 
difficult  still  of  solution. 

It  is  worth  while  to  quote  in  full  an  article  which 
appeared  in  the  Vorwdrts,  the  organ  of  the  Ger- 
man socialists,  and  led  to  the  temporary  suppression 
of  that  paper.  It  is  an  article  showing  singular  fear- 
lessness, for  it  admits  that  without  any  doubt  the 
responsibility  for  the  war  rests  with  Germany. 


THE  IDEOLOGY  OF  CASTE  29 

I  need  not  point  out  that  the  full  meaning  is  to  be 
read  between  the  lines  ;  namely,  that  the  capitalist 
class  was  the  author  of,  and  is  to  be  blamed  for,  the 
war,  and  that  the  capitalist  class  is  synonymous  with 
middle  class  (Bourgeoisie) — in  other  words,  that  it  is 
the  upper  middle  class,  the  moneyed  class,  which  is 
responsible  for  the  bellicose  Imperialism  of  recent 
years,  and  is  the  class  of  which  the  governing  class 
in  Prussia  and  the  Empire  consists.1 

"  The  fact  that  Germany  has,  during  the  last 
ten  years,  enjoyed  unparalleled  commercial  pros- 
perity, has  as  a  consequence,  led,  among  the  ranks 
of  the  capitalists,  to  a  recrudescence  of  Im- 
perialistic tendencies,  which  those  who  have  been 
interested  in  doing  so  have  not  failed  to  proclaim 
all  too  clearly.  Abroad  this  provoked  suspicion, 
much  discontent  and  a  feeling  of  anxiety,  at  least 
in  financial  circles,  the  members  of  which,  for  their 
part,  did  all  in  their  power  to  imbue  the  rest  with 
their  own  alarm.  The  Chauvinists  beyond  the 
frontiers,  would  not,  but  for  the  following  circum- 
stance, have  had  as  much  success  in  their  propa- 
ganda as  they  did.  The  working  people  of  this 
nation  so  commercially  prosperous,  received,  as  it 
were,  a  present  of  the  law  aimed  at  Socialism,  and 
when  that  law  was  rescinded,  a  regime  of  police 
control  of  a  most  irritating  kind.  Equal  rights 
existed  only  on  paper. 
1  I  quote  from  the  published  translation  in  La  Guerre  Sociale. 


30      THE  RULING  CASTE  IN  GERMANY 

"  True,  the  state  of  things  in  Russia  was  still 
worse,  but  Russia  is  far  away,  and  her  interests  are 
mainly  in  the  Far  East,  though  she  is  steadily 
getting  into  closer  political  touch  with  the  Western 
World.  The  revolution  of  1905,  moreover,  has 
shown  that  the  governing  classes  were  not  free 
from  anxiety. 

"  It  seemed  clear  to  foreigners,  and  to  the 
German  working  people,  that  Germany  is  above 
all  the  country  of  Militarism  and  political  op- 
pression. Hence  her  difficulty  in  obtaining  the 
sympathy  of  neutral  nations. 

"  This  also  explains  why,  even  among  the  work- 
ing classes  abroad,  there  have  been  regrettable 
outbursts  of  feeling.  It  is  to  be  lamented,  because 
the  German  peoples  are  held  responsible — one  and 
all — for  the  actions  of  a  single  class. 

"  Further,  we  have  read  in  an  Italian  paper,  that 
all  Germans  are  brigands,  and  we  have  been  able  to 
verify  the  fact  that  an  absurd  fable  has  been  put 
about  to  the  effect  that  German  troops  advanced 
behind  a  living  screen  of  old  people  and  children. 

"  Our  foreign  comrades  may  rest  assured  that 
the  working  class  in  Germany  still  disapproves,  as 
it  always  has,  of  a  policy  of  conquest,  and  is  deter- 
mined to  oppose,  so  far  as  circumstances  permit, 
annexation  of  foreign  territory. 

"  Our  foreign  comrades  may  rest  assured  that, 
though  the  German  working  classes  fight  for  the 
defence  of  their  fatherland,  they  will  not  lose  sight 


THE  IDEOLOGY  OF  CASTE  31 

of  the  fact  that  their  interests  are  identical  with 
those  of  the  proletariat  of  other  nations,  which, 
like  themselves,  against  their  will,  in  spite  of 
formal  and  repeated  peace  demonstrations,  have 
been  dragged  into  war  and  are  doing  their 
duty." 

Is  it  Military  Aristocracy  or  Bourgeois  Capitalism 
that  is  responsible  ?  One  cannot  but  exclude  the 
supposition  of  an  occasion  seized  at  hazard  by  some 
one  person,  some  freak  on  the  part  of  the  Chief  of 
the  State.  Germany  was  ready.  She  had  for  long 
past  seen  war  coming.  More  than  once,  notably  at 
the  time  of  Tangier  and  Agadir,  she  had  threatened. 
A  strong  and  noisy  party  clamoured  for  war.  Whence 
came  its  influence  and  in  whose  interests  was  it 
working  ? 

Here  we  must  look  back  over  history.  The  ruling 
class  in  Germany  is  comprised  in  part  of  an  aris- 
tocracy of  birth,  and  in  part  of  middle-class  capitalists 
more  or  less  recently  ennobled. 

The  internal  history  of  Germany  since  1871,  even 
indeed  since  1866,  is  to  be  understood  by  observing 
the  relations  existing  between  these  two  classes,  now 
friendly,  now  hostile  ;  by  the  opposition  or  the  union 
of  their  forces,  and  not  by  any  struggle  between  the 
ruling  class  and  the  masses  of  the  people,  for  this 
struggle,  which  already  is  in  France,  and  will  soon  be 
in  England,  a  very  serious  matter,  has  in  Germany 
been  but  a  phenomenon  of  secondary  importance  ; 


32      THE  RULING  CASTE  IN  GERMANY 

it  has  influenced  neither  the  evolution  of  the  national 
life,  nor  the  decisions  of  the  Government. 

In  Germany,  as  we  know,  the  passing  of  the  old 
regime  did  not  take  place  all  at  once,  as  it  did  in 
France.  After  the  revolution,  after  the  French 
occupation  of  Germany,  the  aristocracy  got  back 
all  its  privileges.  It  has  lost  them  bit  by  bit,  but 
not  as  yet  entirely  ;  only  round  about  1850  did  the 
feudal  system  of  land  tenure  come  to  an  end. 

Napoleon  had  hit  the  petty  rulers  hard,  but  from 
1813  to  1815  the  princely  families  strove  with  all 
their  might  to  regain  their  independence.  For  the 
most  part  they  were  kept  from  being  an  active 
danger  ;  but  their  stubbornness  was,  until  1870,  a 
serious  obstacle  to  the  unity  of  Germany,  which 
was  effected  in  spite  of  them,  by  fire  and  steel,  as 
Bismarck  said  ;  that  is,  by  the  wars  of  1866  and 
1870.  Even  so,  every  care  was  taken  to  humble 
them  only  to  a  point  which  was  absolutely  necessary, 
for  it  was  the  intention  to  maintain  an  hierarchy. 
What  was  desired  was  unity  of  all  classes,  from 
high  to  low,  under  a  monarch,  and  not  democratic 
unity  controlled  by  the  popular  vote. 

On  the  other  hand,  the  petite  noblesse  had,  dating 
back  to  1820,  formed  a  great  combination,  the 
"  Adelskette,"  for  the  protection  of  then*  rights, 
and  they  could  not  be  thrown  over,  because,  in  the 
first  place,  they  had  rendered  the  greatest  services 
in  the  wars  of  independence.  They  had  risen  as 
one  man  and  had  sacrificed  all  for  the  national 


THE  IDEOLOGY  OF  CASTE  33 

cause  ;  they  had  conscripted  the  people  and  led 
them  to  victory. 

In  the  second,  because  they  were  useful  in  keeping 
in  check  the  power  of  the  grande  noblesse,  whose 
strength  they  feared  ;  in  short,  they  were  a  support 
to  the  throne  against  the  ambition  of  the  princes. 
A  grande  noblesse  opposed  to  democracy,  a  petite 
noblesse  opposed  to  a  grande  noblesse,  both  forming 
a  class  standing  midway  between  the  monarch  and 
the  nation,  was  the  social  order  aimed  at  by  those 
who  worked  to  bring  about  the  unity  of  Germany, 
and  so  well  that  each,  shorn  of  its  "  rights,"  clung 
to  its  "  privileges." 

Treitschke,  in  his  later  teaching — say  about  1890 
— calls  theirs  the  "  political  class."  In  the  middle 
class,  he  says,  there  are  wealth,  learning,  literature, 
and  the  arts  :  their  share  is  a  rich  one.  The  aptitude 
of  the  upper  class  is  for  ruling,  which  is  its  proper 
purpose.  For  long,  in  fact,  the  upper  class,  alone 
or  almost  alone,  occupied  all  the  great  administra- 
tive positions  both  in  civil  and  military  administra- 
tion. 

Bismarck  was  the  very  type  of  this  class  of  man. 
He  possessed  its  intellectual  and  moral  virtues  in 
their  highest,  but  he  evolved  after  1871,  and  with 
him  the  caste  to  which  he  belonged,  under  pressure 
of  circumstances.  Bismarck  was  a  "  Junker,"  a 
Prussian  squireen,  a  supporter  of  monarchy,  indi- 
vidualist, country  gentleman  and  militarist.  Each 
of  his  characteristics  is  an  attribute  of  the  "  caste  " 
o 


34      THE  RULING  CASTE  IN  GERMANY 

frame  of  mind,  in  itself  very  interesting  and  not 
without  nobility,  but  narrow  and  not  sufficient  for 
the  director  of  a  nation's  affairs. 

To  Bismarck  monarchy  was  the  antithesis  of 
parliamentary  government.  The  characteristics  of 
his  mind  were  a  fine  contempt  of  rhetoric  and 
even  of  open  debate,  and  the  firm  belief  that 
democracy  only  tends  to  window-show  and  common- 
place. 

Patriotism,  conceived  as  essentially  relating  to  the 
position  of  one  man  towards  another,  as,  for  in- 
stance, of  one  man,  the  subject,  to  another,  his 
King  ;  and  not  of  an  anonymous  person,  the  official, 
to  an  abstract  idea,  the  State,  the  Republic,  was  in 
olden  days  expressed  by  "  vassalage,"  a  word  which 
has  gone  out  of  use  because,  at  the  present  day,  it 
no  longer  has  any  meaning  for  us. 

The  Junker  is  an  individualist — or  rather  he  used 
to  be.  The  centralisation  of  political  and  adminis- 
trative business  which  the  Jacobins  have  brought 
about  in  France  horrifies  him  ;  he  sees  in  it  only 
disorder  ;  he  sees  in  it  nothing  but  a  mangled  mass 
of  individual  men,  crushed  under  a  formula.  At 
the  present  time,  Germany,  in  accusing  France  of 
anarchy,  means  just  that.  Germany  sees  her  as  a 
huge  hierarchy  of  liberties  ;  self-government  of 
states  within  the  nation,  of  provinces  within  the 
State,  of  communes  within  the  province,  of  land- 
owners within  the  commune. 

Equality,   to  the  Junker,   is   equality   of  rank, 


THE  IDEOLOGY  OF  CASTE  35 

equality  of  importance,  equality  of  riches,  equality 
of  strength  ;  but  to  him  personal  equality  is  a  thing 
contrary  to  nature — an  invention  of  a  lot  of  pro- 
fessors which  he  holds  in  supreme  contempt. 

The  Junker  is  agrarian  and  militarist,  that  is  to 
say  conservative  and  in  favour  of  armed  strength. 
As  late  as  1830  four-fifths  of  the  people  lived  on  the 
land,  and  the  landlord  ruled  his  tenants  in  the 
manner  of  the  patriarchs.  He  has  retained  the 
conservatism  of  the  landed  classes,  a  lively  feeling 
for  power  and  the  instincts  of  a  soldier.  He  is  not 
ambitious  and  has  little  taste  for  distant  ventures. 
He  is  at  once  religious,  warlike  and  a  realist,  broods 
over  his  ambitions,  but  does  not  look  further  than 
his  hand  can  reach. 

Bismarck  was  long  the  opponent  of  naval  arma- 
ments, of  colonial  policy  and  of  imperialism.  Even 
in  the  case  of  his  plans  for  social  reform,  such  as 
sickness  insurance,  old-age  pensions,  which  were 
concessions  to  modern  opinion,  he  merely  embodied 
them  in  his  conception  of  the  monarchical  and 
patriarchal  nature  of  the  State,  and  copied  Colbert 
in  his  orders,  at  an  earlier  date,  with  regard  to  naval 
policy.  He  would  have  gone  so  far  as  to  introduce 
unemployment  insurance,  for,  said  he,  no  subject 
of  the  King  ought  to  die  of  hunger. 

Prussia  owes  her  strength  to  the  Junker — he 
made  Prussia.  Through  him  she  has  passed,  since 
1815,  from  "  Polizeistaat  "  to  "  Kulturstaat."  The 
one  developed  out  of  the  other  :  instead  of  a  state 


36      THE  RULING  CASTE  IN  GERMANY 

watching  over  the  people,  it  became  a  state  super- 
vising and  meddling  with  the  people's  affairs,  a 
state  organising  everything  ;  state  teaching  of  the 
young  ;  state  patronage  of  the  church  ;  agricultural 
reform  and  vast  industrial  and  commercial  under- 
takings all  emanating  from  the  state  ;  the  state 
not  the  outcome  of  the  national  will,  but  the  very 
creator  of  the  nation  itself,  the  living  and  moving 
incarnation  of  the  Hegelian  "  Idea,"  in  other  words, 
of  the  divine  mind.  In  short,  statism  throughout 
the  body  politic. 

Of  all  the  German  aristocracy,  high-born  Pome- 
ranian or  Brandenburger,  it  was  the  Prussian  Junker 
who  most  closely  represented  this  type.  In  the 
south  liberal  leanings,  to  use  a  general  expression, 
and  the  recollection  of  the  French  Revolution,  per- 
sisted further  into  the  nineteenth  century,  but  the 
unification  of  Germany  was  effected  by  military 
force  and  was  contrary  to  the  interests  of  liberalism. 

After  1871 — and  already  after  Sadowa — the 
"  Prussianisation "  of  Germany  was  the  aim  .of 
domestic  policy  ;  and  it  would  seem,  if  one  looks 
up  the  political  history,  that  Bismarck  was  on  the 
point  of  being  successful. 

What  was  this  "  National  Liberal "  party  on 
which  he  relied  so  long  for  support  ?  It  was  the 
old  liberal  party,  of  advanced  views,  infected  with 
democratic,  even  cosmopolitan  ideas,  keeping  touch 
with  the  educated  classes  and  university  men  who 
had  made  so  much  noise,  with  their  pens  and  their 


THE  IDEOLOGY  OF  CASTE  37 

preachings,  round  about  1848  and  even  earlier 
still. 

They  had  dreamed  of  a  unity  of  German  states 
as  the  outcome  of  the  democratic  freedom  and  the 
spiritual  leadership  of  their  country,  now,  in  its 
wisdom,  become  the  heir,  in  Europe,  of  the  French 
Revolution. 

Under  Bismarck's  influence  they  sacrificed  their 
liberal  dreams  to  their  dreams  of  unity  and  nation- 
ality, and  secured  to  the  Chancellor  the  support 
of  the  upper  middle  class.  That  was  indeed  the 
Prussianising  of  Germany.  Yet  the  German  Im- 
perialism of  the  present  day  would  never  have 
borne  fruit  under  these  conditions.  It  could  not 
be  expected  of  a  monarchical  state  supported  by  a 
conservative,  individualistic,  military  and  agrarian 
caste  ;  such  a  state  tends  to  be  non-progressive. 
Well,  what  happened  ?  An  event  of  capital  im- 
portance with  which  all  the  world  is  acquainted, 
but  of  which  we  can  only  in  part  see  the  conse- 
quences, namely,  the  complete  transformation  of 
Germany  from  an  agricultural  to  an  industrial 
country. 

This  phenomenon  dates  back  to  before  the 
nineteenth  century.  In  1848  the  change  was  already 
appreciable.  Since  1866,  and  particularly  since 
1871,  it  has  been  the  dominant  factor  in  the  social 
development  of  the  Empire.  Here,  indeed,  we  have 
revolution  ;  a  veritable  miracle  which  has  turned 
habits  of  life  upside  down  throughout  the  length  and 


38      THE  RULING  CASTE  IN  GERMANY     » 

breadth  of  Germany  ;  a  wonderful  story  which  may 
be  followed  in  the  writings  of  the  economists.1 

At  the  end  of  the  wars  of  independence  four  out 
of  every  five  Germans  lived  in  the  country  districts, 
two  out  of  every  three  were  occupied  on  the  land. 
In  1895  agriculture  was  represented  by  only  35-7% 
of  the  population.  That  portion  which  lives  by 
industrial  and  commercial  occupation  grows  steadily: 
in  1895  it  was  50-6%. 

The  growth  of  manufacture  and  trade  introduces 
a  new  class,  that  of  the  capitalist. 

At  first  it  seemed  as  though  this  would  lead  to 
the  ousting  of  the  nobility.  For  instance,  whilst 
under  the  older  order  of  things  no  middle-class  man 
could  acquire  landed  estates,  yet,  towards  1880,  we 
find  that  in  East  Prussia  alone  7086  out  of  11,065 
belonged  to  commoners. 

Money  alone  can  have  procured  them.  Worldly 
wealth  took  the  place  of  lineage.  To-day  five  mem- 
bers of  the  Prussian  ministry,  or  a  little  more  than 
a  third,  strip  them  of  their  titles,  are  of  the  middle 
class. 

The  new  dominant  class  ousted  the  old  in  two  ways, 
by  despoiling  it  of  its  clientele,  and  by  acquiring  con- 
siderable influence  in  the  state.  The  weight  of  a 
class  in  the  social  scale  may  be  expressed  as  the  com- 

1  See,  among  others :  Sombart,  Der  moderne  Kapitalismua  ; 
Lamprecht,  Zur  Jungaten  deutachen  Vergangerheit ;  Lichten- 
berger  has  summed  up  the  matter  remarkably  well  in  The 
Evolution  of  Modern  Germany,  London,  Constable  and  Co. 


THE  IDEOLOGY  OF  CASTE  39 

bination  of  methods  at  its  disposal  by  reason  of 
numbers,  personal  influence,  wealth  and  the  im- 
portance of  the  interests  which  it  stands  for. 

The  clientele  of  the  country  nobleman  were  mainly 
peasants  whose  numbers  have  steadily  decreased. 
The  attractions  of  industrial  and  commercial  life 
have  brought  about  a  veritable  emigration  to  the 
factories  and  the  towns.  Statistics  have  shown  this 
change  in  progress  for  many  years  ;  economists  and 
sociologists  have  called  attention  to  it,  but  no  remedy 
has  been  found.  To-day,  although  there  has  of  late 
been  less  emigration,  Germany  lacks  men  to  cultivate 
her  crops,  and  is  in  the  position  of  having  to  import 
agricultural  labour  and  even  cereal  crops.  She  no 
longer  grows  sufficient  food-stuffs  for  her  popu- 
lation. 

Further,  the  peasant  who  has  remained  on  the  soil 
is  no  longer  a  bondman,  and  agriculture  itself  has, 
through  specialisation,  become  industrialised.  There 
is  a  story  told  of  a  peasant  woman  who  declared  that 
she  had  no  time  to  do  her  own  washing,  and  therefore 
sent  it  to  the  steam  laundry  at  Carlsruhe.  It  is  not 
merely  an  economic  transformation,  but  an  ethical 
development. 

The  farmer  who  no  longer  works  his  land  to  pro- 
duce food-stuffs  for  himself,  but  in  order  to  sell  them, 
and  who  has  to  live  by  what  he  sells,  strives  to  pro- 
duce all  he  can  ;  he  hires  foreign  labour,  and  gets  all 
he  can  out  of  the  land.  There  is  no  longer  the  close 
association  between  employer  and  employed  which 


40      THE  RULING  CASTE  IN  GERMANY 

existed  of  old.  Thus  the  landowner  is  dragged  into 
the  wheels  of  the  machinery  of  capitalism. 

As  to  the  "  weight  "  of  the  new  class,  it  has  grown 
prodigiously  in  the  years  following  the  war  of  1870, 
thanks  to  the  millions  that  the  Empire  has  been  able 
to  invest  in  its  industries,  and  with  which  it  has 
endowed  its  trade  and  its  mercantile  marine,  and  has 
linked  up  the  network  of  its  high  roads,  its  canals, 
and  its  railways. 

The  fact  that  capital  tends  to  accumulate  in  cer- 
tain hands  has  been  strikingly  evidenced.  During 
the  notable  years  1871-1874,  which  the  Germans  call 
"  Griinderjahre  "  or  days  of  foundation,  vast  in- 
dustrial and  commercial  undertakings  came  into 
being  and  so  flourished  that  it  seemed  as  if  nothing 
could  stop  them.  A  director  of  the  Deutsche  Bank, 
or  the  Dresdener  Bank,  the  director  of  a  Transatlantic 
Shipping  line  such  as  the  Hamburg-Amerika,  or  the 
board  of  some  electrical  manufacturing  combine, 
had  far  more  influence  in  councils  of  state  than 
had  a  baron,  a  count,  or  petty  prince  of  one  of 
the  mediatised  states. 

What  was  aristocracy  to  do  ?  Fight  with  des- 
peration ?  Well,  at  first  it  did.  For  some  time, 
Bismarck,  himself  an  agrarian,  sided  with  it,  but  he 
had  no  scruples  about  setting  up  paper  mills  on  his 
property  at  Varzin.  The  Emperor  himself  is  credited 
with  owning  porcelain  factories.  Some  of  the  titled 
classes  had  long  been  endeavouring  to  adapt  them- 
selves to  the  new  conditions,  but  did  not  readily  do 


THE  IDEOLOGY  OF  CASTE  41 

so,  and  their  efforts  frequently  ended  in  bankruptcy. 
Freytag,  in  what  is  perhaps  his  masterpiece,  has 
described  the  first  steps  in  this  social  change.1 

A  large  proportion  of  the  upper  classes  gave  in,  fell 
into  the  hands  of  financiers,  money-lenders,  ex- 
ploiters of  agricultural  undertakings,  or  sold  its  lands 
and  sought  refuge  in  the  army  or  in  the  civil  service  ; 
the  rest  struggled  on  as  best  it  could. 

Just  as  there  is  antagonism  between  those  whose 
traditions  are  of  the  Church  and  conservative,  and 
those  who  are  for  free  thought  and  cosmopolitanism, 
so  their  interests  were  opposed  to  those  of  the 
capitalists.  The  landowners  claimed  a  toll  upon 
agricultural  produce  in  order  to  level  up  the  value 
of  their  wares.  The  manufacturing  classes  wanted 
living  to  be  cheap  in  order  to  keep  wages  down,  so 
that  they  might  compete  in  foreign  markets.  One 
can  recall  the  temper  with  which  Bismarck  was 
assailed,  and  the  vehement  opposition  he  met  with, 
when  his  colonial  and  tariff  policy  obliged  him  to 
incline  towards  the  party  representing  manufacture 
and  trade .  The  great  Chancellor  went  over  altogether 
in  1879,  and  was  almost  regarded  as  a  traitor. 

Yet  he  had  seen  clearly.  By  equalising  opposing 
forces,  by  giving  protective  tariffs  to  this  one  and 
that,  and  by  making  up  to  one  party  for  advantages 
given  to  the  other,  he  succeeded  in  reconciling  them. 

The  power  of  Germany  is  the  outcome  of  this  recon- 
ciliation. The  middle  class  has  from  time  to  time 

1  Gustav  Freytag,  Soil  und  Haben,  1885. 


42      THE  RULING  CASTE  IN  GERMANY 

sulkily  opposed  votes  of  credit  for  the  Army,  but  has 
always  passed  them.  Militarism,  which  is  the  main- 
stay of  the  aristocracy,  has  been  placed  at  the  dis- 
posal of  the  ambitious  capitalist  through  the  prestige 
of  armed  force,  by  raising  ambitions  and  by  inspiring 
fear,  more  than  once  by  nothing  short  of  intimidation 
the  army  has  become  the  means  of  achieving  economic 
victory.  Further  combinations,  other  mutual  under- 
standings, have  been  brought  about  which  have 
made  modern  Germany  not  only  unlike  other  nations 
but  unique.  In  her  we  have  an  instance  of  the  psy- 
chology of  the  crowd  which  is  of  the  greatest  interest. 
To  go  into  all  its  details  in  the  endeavour  to  explain 
it  would  be  a  lengthy  matter.  The  blending  of  aris- 
tocratic and  military  leanings  with  those  of  com- 
merce and  plutocracy  ;  acquiescence  in  being  police 
controlled ;  willingness  to  live  by  the  rules  of 
"  Kulturstaat,"  though  retaining  individual  initia- 
tive and  the  freedom  of  the  capitalist  trader ; 
methodical  conduct  of  business  combined  with  a 
taste  for  speculation  ;  all  that  goes  to  the  making  of 
German  Imperialism  as  distinct  from  any  other,  by 
reason  that  to  a  definite  objective,  namely,  economic 
conquest,  are  added  less  defined  ones,  those  in 
which  the  aristocratic  class  delights,  namely,  love  of 
lording  it  over  others,  love  of  display  and  of  demon- 
strating to  itself  its  own  superiority. 

Moreover,  economic  conquest  was  an  urgent 
necessity  for  Germany.  Become  one  vast  manu- 
facturing town,  she  no  longer  can  feed  herself. 


THE  IDEOLOGY  OF  CASTE  43 

Since  1885  the  value  of  her  imports  has  exceeded 
her  exports.  In  1905  she  bought  to  the  value  of 
£69,000,000  more  than  she  sent  abroad. 

"  Economists  have  estimated  that  if  she  were  to 
grow  food-stuffs  and  raw  materials  of  which  she 
has  need  to  feed  her  people  and  keep  her  machinery 
employed  upon  soil  of  her  own,  she  would  need  a 
territory  at  least  double,  if  not  treble  the  area  of 
the  Empire  itself,  and  that  without  taking  into 
account  the  produce  of  tropical  countries,  such  as 
spices,  coffee,  or  cotton,  which  her  geographical 
position  renders  it  impossible  for  her  to  produce."1 

What  a  temptation  to  make  use  of  &  military  power 
before  which  the  world  has  trembled  for  fifty  years, 
if  not  to  "  double  or  increase  by  three  times  the  area 
of  the  Empire,"  at  least  to  round  it  off  and  add  to  it 
some  fine  new  colonies  already  reclaimed  by  other 
nations  ! 

Whence,  then,  does  Germany  obtain  the 
£69,000,000  of  which  she  is  short — good  year  or 
bad — with  which  to  balance  her  account  ?  It  is 
made  up  by  her  freight  charges  and  by  interest  on 
foreign  investments.  It  is  necessary  to  her,  there- 
fore, that  her  foreign  trade  should  increase  and  that 
she  should  compete  successfully  with  other  countries. 
She  must  at  all  costs  open  up  markets  in  which  to  sell 
her  manufactures  that  she  may  buy  food-stuffs  of 

1  Lichtenberger,  op.  cit.,  p.  52. 


44      THE  RULING  CASTE  IN  GERMANY 

which  she  no  longer  grows  a  sufficient  quantity  for 
her  needs.    The  alternative  is  famine. 

Let  us  now  consider  what  has  been  the  effect  on 
the  public  mind,  and  how  the  interaction  of  all  these 
influences  and  the  results  of  the  economic  situation 
have  been  reduced  to  a  formula.  This  is  a  matter  of 
no  small  importance,  for  mankind  always  claims  to 
be  actuated  by  reason,  and  indeed  is,  but  rarely  with 
knowledge  of  its  source  or  meaning. 

The  idea  of  Imperialism  would  not,  without  some 
appeal  to  the  mind,  have  taken  a  hold  among  all 
ranks  and  classes  of  society.  A  passion  for  com- 
mercial supremacy  had  not  taken  possession  of  all 
Germany.  The  professional  middle  class,  the  corps 
of  officers,  the  professors,  the  clergy,  were  out  of 
sympathy  with  it.  It  was  indirectly  that  they  were 
won  over.  It  is  not  every  one  who  looks  upon  his 
native  land  with  the  eyes  of  an  oligarch  of  high 
finance.  A  movement  has  force  when  it  appeals  to 
the  instincts,  when  it  awakens  feelings,  often  diverse 
enough,  and  blends  them  with  a  semblance  of  logical 
reasoning.  It  is  not  essential,  but  it  is  helpful  to 
clothe  it  in  the  language  of  the  day.  In  mediaeval 
times  it  was  the  language  of  religion  ;  starting  with 
the  seventeenth  century,  it  was  that  of  metaphysics  ; 
in  our  day,  it  is  that  of  science  adorned  with  Greek 
nomenclature. 

Few  of  the  German  systems  of  philosophy  of  the 
second  half  of  the  nineteenth  century  have  attained 


THE  IDEOLOGY  OF  CASTE  46 

any  high  position.  They  are  the  outcome  of  credit- 
able scholarship,  wrought  by  well-read  men,  of 
whom  some,  like  Wundt,  are  accepted  authorities  ; 
without  the  power  either  to  master  their  subject  or 
convince  their  readers.  They  seem  out  of  place  in 
their  century.  Not  to  them,  not  to  Eucken,  with 
his  happy  knack  of  popular  appeal,  not  to  Windel- 
bund,  nor  Ostwald  did  the  educated  public  look  to 
be  taught  how  to  think. 

In  order  to  satisfy  the  need  for  something  to  direct 
their  thoughts,  which  need  was  felt  in  spite  of  every- 
thing, they  formed  associations — set  up  churches — 
some  to  God,  others  not :  as,  for  instance,  one  of  some 
note,  the  "  Monistenbund  "  where  Haeckel  preached 
the  doctrine  of  materialism,  dressed  up  in  a  sort  of 
pantheistic  biology.  But  the  light  of  the  real  genius, 
the  man  of  two  generations  before,  Neitzsche,  shone 
out  from  beyond  all  associations  and  schools  of 
thought.  That  his  thought  has  been  misinterpreted 
there  is  no  denying.  This  eagle  who  could  look  into 
the  face  of  the  sun,  was  presented  to  the  young  in 
every  philosophical  aspect  which  might  forward  a 
union  between  the  industrial  and  the  military 
classes. 

Nietzsche  had  depicted  as  in  words  of  fire  the 
return  of  the  heroic  age.  He  saw  his  "  Superman  " 
as  an  ardent  spirit,  plunged  in  sorrow,  contemplating 
with  calmness  the  tragedy  of  life,  by  individual  effort 
overcoming  his  own  and  the  weakness  of  mankind, 
by  unfaltering  determination  rising  ever  higher.  The 


46      THE  RULING  CASTE  IN  GERMANY 

Germans  twisted  his  teaching  about  until  he  became 
the  apostle  of  brute  force,  something  in  the  nature  of 
a  Messiah  of  the  struggle  for  existence.  But  they  had 
soon  done  with  him,  for  they  unearthed  Gobineau. 
He  also,  who,  if  no  genius,  was  at  least  not  wanting 
in  intelligence,  would  have  been  surprised,  and 
hardly  flattered  with  the  role  he  was  made  to  play. 
The  dolicocephalic  blond  type  of  man,  whose  praises 
he  had  sung,  was  not  quite  the  one  we  are  concerned 
with,  if  we  may  judge  by  his  writings.  Still,  he  had 
proclaimed  the  pre-eminence  of  the  German  races. 

His  doctrine  was  the  nucleus  around  which  a  whole 
number  of  doctrines  grew.  Theories  were  drawn  from 
very  varied  sources,  with  which  the  link  is  not  at  all 
clear  when  studied  logically,  but  which  is  at  once 
obvious,  on  the  other  hand,  if  one  looks  not  for  proof 
but  only  for  what  one  wishes  to  prove ;  and  this 
latter  was  to  be  found  in  the  need  to  justify  a  mili- 
tarist and  commercial  form  of  Imperialism,  born,  as 
we  have  seen,  of  calculated  intention  and  essen- 
tially practical  motives. 

I  by  no  means  pretend  that  the  whole  thing  was 
thought  out  beforehand,  nor  that  naturalists, 
economists,  historians,  sociologists  and  lecturers 
were  set  to  work  on  a  definite  plan  to  build  up  an 
Imperialist  philosophy  for  the  use  of  the  adult  and 
commonplace  men  of  a  dolicocephalic  blond  race. 
More  than  one  coincidence  may,  however,  be  noted. 
The  ground  was  admirably  prepared  for  them  by  the 
existence  of  a  commercial  and  military  class.  The 


THE  IDEOLOGY  OF  CASTE  47 

promoters  of  the  doctrine  lived  in  an  atmosphere  of 
their  own,  their  character  was  moulded — or  dis- 
torted— by  it ;  their  business  was  to  accumulate 
facts,  invent  arguments  and  work  out  schemes  for 
adapting  science,  history  and  philosophy  to  the  needs 
of  this  fierce  ambition  for  leadership,  which  was  the 
common  characteristic  of  Germany,  and  which  has 
been  the  link  uniting  the  old  and  the  new  ruling  class. 

To  prove  that  this  is  so,  it  is  only  necessary  to  read 
the  Pan-Germans  one  by  one,  commencing  with  the 
most  straightforward  and  going  on  to  the  more  in- 
volved. 

The  dominating  idea  is  always  the  same.  It  leads 
back  in  every  case  to  an  ardent  desire  of  conquest, 
and  it  is  quite  easy  to  see  the  work  superimposed  on 
the  basic  groundwork  of  men  of  higher  attain- 
ments, to  note  all  the  means  employed  to  disguise, 
to  adorn  and  to  embellish  it. 

Dates  matter  little,  but  at  one  end  of  the  scale  we 
may  place  the  work  of  the  Prussian  General  Bern- 
hardi,1  and  at  the  other  the  fire-eating  rantings  of 
that  most  ardent  of  Pan-Germans,  convert,  turncoat, 
Houston  Stewart  Chamberlain.2 

The  German  military  spirit  is  distinguished  by  a 
vigorous  directness  and  frankness  which  critics  out 
of  sympathy  with  it  have  sometimes  characterised 

1  General   Friedrich  von  Bernhardi,  Germany  and  the  Next 
War.    (Arnold.) 

2  H.    S.    Chamberlain,    The  Foundations   of  the   Nineteenth 
Century.     (Lane.) 


48      THE  RULING  CASTE  IN  GERMANY 

as  brutal.  There  is  no  mistaking  what  Bernhardi, 
who  is  recognised  as  one  of  the  best  writers  on 
military  matters  in  Germany  to-day,  believes.  To 
him  war  is  not  only  a  law  of  nature,  but  a  necessary 
means  to  the  advancement  of  civilisation.  War  is 
good  because  it  has  a  reforming  influence.  In 
measuring  swords,  nations — living  things  as  they 
are — prove  their  worth,  and  through  victory  testify 
to  their  rightful  claims ;  for  it  is  only  just  that  the 
greater  should  dominate  the  lesser,  and  the  token  of 
pre-eminence  is  to  be  found  in  superior  strength. 
Germany  has  the  strength.  Moreover,  it  is  vital 
that  she  should  acquire  new  markets  for  her  trade 
and  new  lands  for  her  seventy  millions  of  population. 
Well,  what  lands  ?  We  are  not  told.  With  a  balance 
of  power  in  Europe  no  such  acquisition  is  possible. 
To  gain  her  ends,  Germany  must  predominate  in 
Europe.  German  expansion  means  a  predominant 
Germany,  and  the  necessary  preliminary  to  this  is 
war. 

It  means  war  first  with  France  and  then  inevitably 
with  England.  On  France  will  fall  the  blame,  since 
they  nourish  thoughts  of  "  revanche,"  and  on  the 
English  because  their  maritime  supremacy  is  a 
menace  to  the  liberty  of  the  world  ;  so  that,  in  a 
European  war  Germany  will  stand  for  liberty,  for 
the  rights  of  man  and  for  civilisation. 

The  main  idea,  that  of  conquest  and  hegemony,  is, 
as  we  have  shown,  obscured  by  various  subterfuges  : 
punishment  of  the  French,  the  ending  of  England's 


THE  IDEOLOGY  OF  CASTE  49 

acquisitiveness,  Germany's  position  as  the  champion 
of  liberty  throughout  the  world. 

General  von  Bernhardi  states  the  case  with 
soldierly  straightforwardness  ;  the  historians,  the 
moralists,  the  ethnographers  and  sociologists  deck 
it  out  with  many  further  embellishments  which  may 
all  be  found — I  cannot  say  methodically  displayed, 
but  anyhow  heaped  up  one  upon  another — in  Mr. 
Chamberlain's  colossal  publication.  At  least,  nearly 
all,  for  there  are  two  that  I  have  not  found  there, 
whilst  other  writers  twist  and  turn  them  with  infinite 
variety  ;  they  are  the  law  of  natural  selection  and 
the  survival  of  the  fittest.  Perhaps  these  are  one  and 
the  same  thing  in  theory,  but  in  practice  they  differ. 

Think  of  the  Darwinian  principle  applied  to  all  the 
works  of  man.  Darwin,  in  speaking  of  the  survival  of 
the  fittest,  did  not  mean  by  fittest  the  most  warlike, 
the  one  with  the  longest  fangs.  The  Germans,  how- 
ever, have  restricted  his  theory  whilst  extending  its 
compass  when  applying  it  to  human  affairs,  and 
teaching  it  abroad  among  the  people. 

War  for  war's  sake,  war  from  the  point  of  view  of 
one  of  man's  normal  activities,  who  in  making  war  is 
only  obeying  one  of  the  common  laws  of  nature ;  such 
a  point  of  view  outdoes  General  von  Bernhardi ;  or, 
rather,  if  you  will,  it  is  the  same  idea  as  his,  but  based 
on  biology,  dressed  up  to  look  like  science  and 
propped  up  by  every  kind  of  argument  to  be  drawn 
from  botany  and  zoology. 

Survival  of  the  fittest  is  perhaps  the  most  popular 


50      THE  RULING  CASTE  IN  GERMANY 

item  in  the  Pan-German  code.  There  is  nothing  in  it 
which  might  not  have  been  better  supported  by 
quoting  Nietzsche.  Indeed  Fouillee  had  already 
expressed  the  view  in  his  Idee  Moderne  des  Droits  that 
the  French  incline  to  base  their  ideas  of  right  on 
common  sense,  the  English  on  profit,  and  the 
Germans  on  might  of  arms. 

Right  is  often  doubtless  nothing  more  than  a  fact 
established  by  tradition,  an  act  of  violence  long 
since  acknowledged,  but  it  is  one  thing  to  acknow- 
ledge that  right  is  a  sequel  to  might,  and  another 
to  pretend  that  might  is  right. 

What  can  one  think  of  a  people  which  looks  upon 
armed  force  not  as  a  means  to  an  end,  but  as  an 
end  in  itself,  and  sets  it  up  as  its  ideal  ? 

How  often  have  we  not  seen  the  army,  the  pro- 
fessors, the  people  leap  up  with  enthusiasm  when 
the  Emperor  has,  so  to  speak,  shaken  the  mailed 
fist  ?  Imbued  as  we  have  been  with  humanitarian 
doctrines  which  have  grown  up  in  Western  Europe 
during  the  nineteenth  century,  we  are  astounded 
to  find  how  during  the  same  period  the  very  oppo- 
site, the  belief  in  "  the  will  to  power,"  has  sunk  into 
the  minds  of  the  Germans. 

With  vigorous  outspokenness  Bernhardi  has 
declared  that  the  next  war — the  one  which  to-day 
confirms  his  word — would  embrace  all  Europe,  that 
it  would  be  war  to  the  bitter  end,  that  neither 
international  law  nor  Hague  conventions  would  be 
obeyed.  That,  in  short,  it  would  be,  in  his  own 


THE  IDEOLOGY  OF  CASTE  51 

words,  war  to  the  knife.  He  did  not  exaggerate. 
His  forecast  throws  an  ominous  light  on  the  mas- 
sacres at  Aerschot,  the  sack  of  Louvain,  deportation 
of  non-combatants,  the  bombardment  of  Rheims 
Cathedral  and  the  attempt  on  Notre  Dame. 

The  creed  of  Might  being  a  "  lietmotiv  "  of  Pan- 
Germanism,  it  is  interesting  to  study  the  changes 
of  key  and  flourishes  with  which  it  has  been  made 
attractive.  What  might  have  been  guessed,  and 
yet  was  not  suspected,  is  that  remarkable  contempt 
for  the  weak  into  which  worship  of  power  has  led 
the  politicians  and  historians  of  Germany,  which  is 
to  be  seen  in  their  heartless  treatment  of  the  smaller 
nations. 

Turn  to  Mommsen,  Niebuhr  and  Droysen  and  to 
Sybel,  and  in  particular  Treitschke,  who  was, 
dating  from  1875,  whether  in  the  professorial  chair 
at  Berlin  or  in  the  Reichstag,  the  mouthpiece  of  the 
young  university  man.  What  do  Holland,  Belgium 
and  Denmark  matter  ?  and  what  would  Switzerland 
matter  once  it  were  in  Germany's  interest  to  attack 
us? 

I  have  somewhere  read  that  Ranke,  a  man  of  less 
narrow  mind  than  the  others,  nevertheless  urged 
on  Bismarck  the  advisability  of  annexing  Switzer- 
land, but  I  cannot  find  the  passage  again. 

The  economists  joined  in  with  enthusiasm.  Once 
might  is  mistaken  for  right,  duty  becomes  synony- 
mous with  self-interest,  and  they  were  not  slow  to 
point  out  that  the  commercial  interests  of  Germany 


52      THE  RULING  CASTE  IN  GERMANY 

lay  in  seizing  the  harbours  and  shores  of  the  North 
Sea.  One  of  them,  and  not  the  least,  von  Halle, 
urged  the  commercial  occupation  of  Holland ; 
more,  he  called  for  a  treaty  to  the  effect  that  in  the 
event  of  war  Holland  should  cede  her  harbours  to 
Germany,  that  being,  in  his  view,  the  only  condition 
under  which  Germany  could  put  up  with  such  non- 
sense (unding)  as  the  possession  of  the  mouths  of 
the  Rhine  by  other  than  Germans. 

In  his  book  on  the  recent  history  of  Germany, 
Lamprecht  takes  pains  to  point  out  to  the  Dutch 
that  their  enemy  is  England. 

After  the  manner  of  great  ecclesiastics,  the 
question  of  the  absorption,  and  even  the  wiping 
off  the  map,  of  smaller  states  has  become  a  com- 
mon bond  between  the  large  body  of  obscure  pro- 
fessors and  the  well-drilled  holders  of  chairs  in  the 
universities. 

Some  of  our  own  Swiss  fellow-citizens  were  dis- 
gusted, when  war  broke  out,  at  finding  that  some 
visitors,  less  self-controlled  than  others,  would  break 
out  in  ecstasies  about  the  beauty  of  our  country 
and  declare  out  loud  that  it  would  soon  be  theirs, 
as  they  travelled  on  our  railways,  on  our  steamboats, 
on  our  tramcars,  and  as  they  sat  in  our  restaurants. 
Theirs  was  but  a  vulgar  echo  of  what  was  very 
generally  being  taught  beyond  the  Rhine.  The 
smaller  nations  have  no  rights.  Why  ?  Just 
because  they  are  small. 

The  strong  man  shows  his  superiority  by  his  very 


THE  IDEOLOGY  OF  CASTE  53 

strength,  and  progress  demands,  as  civilisation 
requires,  the  triumph  of  the  strong.  The  powerful 
nation  will  organise  the  world  as  it  should  be. 
Those  who  may  resist  will  only,  by  so  doing,  show 
their  inferiority.  It  is  the  part  of  the  inferior  to 
obey,  and  ethics  demand  that  he  should  be  compelled 
to  do  so. 

Do  not  think  that  this  second  variation  on  the 
theme  of  brute  force  is  an  invention  of  my  own. 
I  neither  exaggerate  the  words  nor  the  ideas,  indeed, 
if  anything,  I  understate  them. 

One  cannot  but  find  this  idea  both  worthy  of 
study  and  intensely  interesting  if  one  traces  it  to 
its  origin,  and  if,  in  comparing  it  with  others,  one 
recognises  in  it  one  of  the  typical  foundations  of 
the  science  of  ideas,  which  is  itself  the  expression 
of  the  frame  of  mind,  the  habits  and  the  interests 
of  a  caste.  This  caste  having  come  into  being,  and 
having  got  its  irresistible  powers  through  a  mingling 
of  the  two  governing  classes,  one  can  trace  the  role 
played  by  each,  in  the  part  scientific,  part  historical, 
part  moral  and  even  metaphysical  dress  in  which  the 
scholars  have  clothed  it. 

Would  you  like  to  know  how  an  illustrious 
scholar,  known  among  philosophers  as  a  chemist 
and  among  chemists  as  a  philosopher,  nay,  more, 
one  of  the  leaders  of  the  "  Monistenbund,"  that  great 
league  of  philosophers  which  has  inherited  the  not 
very  flourishing  legacy  of  free  thought,  and  which 
prides  itself  not  only  on  its  intellectual  freedom. 


54      THE  RULING  CASTE  IN  GERMANY 

but  on  its  human  kindness,  sums  it  up  ?  And  does 
the  article  recently  contributed  to  the  Monistische 
Sonntagspredigten  read  to  you  like  a  sermon — a 
Sunday  address — which  comes  from  the  pen  of  no 
other  than  William  Ostwald,  the  inspirer  of  youth, 
Ostwald  the  Leipzig  professor — in  short,  Ostwald. 

In  it  he  speaks  of  such  a  peace  as  must  be  con- 
cluded : — 

"  If  the  various  countries  of  Europe  could  not 
be  brought  to  this  idea  of  peace  by  popular 
consent,  Germany,  after  this  victorious  campaign, 
will  be  in  a  position  to  enforce  it.  We  ought  only 
to  conclude  such  a  peace  as  will  make  European 
war  impossible  in  future,  and  we  must  impose 
on  our  adversaries,  who  are  not  only  similar  to 
ourselves  in  the  Christian  sense,  but  also  necessary 
to  our  plans,  such  terms  that  for  fifty  years  peace 
may  not  be  disturbed. 

"  In  the  first  place,  England,  the  greatest 
enemy  to  the  peace  of  Europe,  must  be  rendered 
incapable  of  doing  harm,  and  that  in  a  lasting 
manner,  by  putting  an  end  once  and  for  all  to 
her  hitherto  uncontested  naval  supremacy.  The 
foundation  of  her  power,  namely,  her  fleet,  should 
be  taken  from  her,  or  so  reduced  as  to  present 
no  danger  in  the  future.  As  to  her  army,  we  shall 
be  so  superior  to  her  and  our  other  neighbours 
that  all  of  them  will  give  up  any  pretence  of 
maintaining  an  army  at  their  own  expense,  and 


THE  IDEOLOGY  OF  CASTE  55 

will  entrust  to  us  the  task  of  guarding  against 
any  danger  from  the  East.  Having  made  Ger- 
many the  military  centre  of  gravity  of  Europe, 
it  will  be  no  less  necessary  to  make  her  the  in- 
dustrial centre.  The  recent  happenings  which 
have  thrown  light  on  the  inferiority  of  the 
organisation  of  the  Bank  of  England  and  the 
Bank  of  France,  as  compared  with  the  German 
Reichsbank,  have  shown  the  necessity  for  de- 
spoiling London  of  the  money  market  of  Europe 
which  it  now  is,  and  entrusting  it  to  Germany. 
It  would  appear  that  Hamburg,  which  boasts 
men  with  the  necessary  qualifications,  and  which 
is  well  situated  for  the  purpose,  is  indicated  for 
this  important  position. 

"...  We  do  not  seek  to  impose  the  German 
tongue,  German  thought,  any  more  than  German 
taste  and  German  art  on  the  rest  of  the  world 
when  victory  is  won.  Apart  from  the  practical 
difficulties  that  there  would  be  in  realising  such 
an  aim,  it  would  be  out  of  keeping  with  the  spirit 
in  which  our  Kultur  has  been  developed.  Never- 
theless, following  upon  the  predominance  of 
'  Deutschtum '  in  Europe,  many  of  the  obstacles 
which  the  other  peoples  have  thrown  in  the  way 
of  '  Kultur  '  would  disappear. 

"...  It  will  be  possible  again  to  proceed  with 
scientific  undertakings,  to  which  the  war  has  put 
a  stop,  which  to-day  seem  at  first  sight  to  be 
held  up  for  a  long  time,  when  the  United  States 


56      THE  RULING  CASTE  IN  GERMANY 

of  Europe,  under  German  direction  and  with  the 
German  Emperor  for  president,  have  again  taken 
up  the  tasks  of  civilisation  and  humanity."1 

Does  not  this  Ostwald  put  it  clearly  ?  And  what 
generosity  he  shows  !  The  conquered  may  retain 
their  language,  their  thought,  their  taste,  their  art : 
even  German  art  is  not  to  be  forced  on  them  !  Is 
it,  perhaps,  from  a  desire  to  curtail  the  immense 
benefits  that  are  to  be  theirs  ?  Instead  of  charity 
which  is  carried  to  the  point  of  weakness,  have  we 
here  a  refined  form  of  cruelty  which  is  to  withhold 
beauty  in  all  its  purity  from  them,  and  to  plunge 
them  deeper  in  blindness,  like  the  damned,  whose 
awful  punishment  consists  in  being  denied  the  sight 
of  God  ?  Or  does  Herr  Ostwald,  born  in  "  Deut- 
schtum,"  confirmed  in  the  "  Monistenbund,"  fed 
upon  German  literature,  value  at  too  low  a  price 
what  has  cost  him  too  little,  having  comfortably 
surveyed  the  chefs  d'ceuvres  of  German  art  from  the 
vantage  point  of  his  professor's  chair  at  Leipzig  ? 

One  often  fails  to  value  what  one  has  obtained 
too  easily.  Others  have  tasted  the  bitterness  of 
longing,  hopes  thwarted,  the  vivid  impressions 
revealed  to  the  novice.  With  no  such  semblance 
of  detachment  does  Houston  Stewart  Chamberlain 
speak  of  German  "  Kultur."  One  can  see  that  he 

1  Only  lately  Ostwald  was  making  a  pretence  of  pacific 
intentions  and  was  urging  France  to  disarm.  Now  we  can  see 
what  was  meant  by  peace  talk  coming  from  this  lover  of  peace. 


THE  IDEOLOGY  OF  CASTE  57 

has  had  to  study  to  win  knowledge,  and  that  having 
at  length  attained  to  it  he  has  no  intention  of  losing 
what  he  has  acquired.  The  question  of  natural 
selection,  the  ethics  of  power,  the  judgment  passed 
by  history  on  the  smaller  nations,  the  mission  to 
spread  civilisation  imposed  upon  all-powerful  Ger- 
many by  reason  of  her  very  might,  her  economic, 
scientific,  artistic  superiority,  all  leads  up  to  the 
glorification  of  the  man  of  German  lineage,  even  to 
the  point  of  its  being  his  duty  to  rule  the  world, 
duty  which  gives  him  the  feeling  that  he  is  a  very 
Emperor,  and  before  which  he  inclines  his  head 
with  such  fine  modesty.  Tu,  regere  imperio  popu- 
los.  .  .  . 

The  exaltation  of  the  man  of  German  race  has 
been  trumpeted  by  Houston  Stewart  Chamberlain 
with  more  effect  than  by  Gobineau,  who  lingered  over 
a  dissertation  about  the  Aryans ;  better  even  than  by 
Nietzsche,  who  was  wont  to  let  fall  hard  words  about 
the  "  blond  beast,"  because  hi  proclaiming  it  he 
makes  more  play  with  history,  ethnology,  psy- 
chology, sociology  and  metaphysics. 

His  book  cannot  be  summarised ;  not  so  much  by 
reason  of  its  1379  pages  and  two  appendices,  but 
because  his  thought  is  embedded  throughout  the 
text,  and  all  that  the  world  contains  is  also  to  be 
found  in  Mr.  Chamberlain's  book.  It  is  the  man  of 
German  race  who  made  everything.  Not  the  world 
indeed  ;  he  has  only  remodelled  that  in  the  past, 
but  he  will  of  a  certainty  remodel  it  again,  and 


58      THE  RULING  CASTE  IN  GERMANY 

there  is  so  much  in  the  nature  of  creation  in  the 
method  of  his  remodelling  that  one  may  say  that 
without  him  the  Creator  himself  could  not  fail  to  be 
hampered  in  His  work. 

He  has  taken  to  himself,  so  far  as  it  was  worth 
taking,  the  heritage  of  Greece  and  Rome.  He  has 
disentangled  from  it  the  contributions  of  doubtful 
worth  which  a  number  of  different  peoples,  the 
"  ethnical  chaos,"  had  mixed  with  it  under  the 
Empire. 

During  the  period  from  A.D.  1200  to  1800  he 
has  founded,  brought  to  fruition  and  on  several 
occasions  saved  from  destruction  a  new  civili- 
sation. 

Italy,  mother  of  our  sciences  and  arts,  is  of  Ger- 
man origin.  The  great  architecture  of  the  Middle 
Ages  is  German.  True  interpretation  of  Christianity, 
true  conception  of  art,  real  social  order,  love  of 
nature,  knowledge  of  human  nature,  exploration  of 
the  world  and  of  the  soul,  in  a  word,  all  the  great 
luminous  ideas  are  German.  Everything  is  German, 
except  perhaps  just  you,  reader,  and  me  ;  well,  all 
the  worse  for  you,  all  the  worse  for  me. 

After  this  book,  the  commercial  success  of  which 
was  prodigious,  nothing  really  remained  to  be  said. 
The  German  mind  had  appropriated  to  itself  the 
universe  ;  all  that  remained  was  for  the  German 
sword  to  complete  the  work.  The  sword  has  been 
drawn. 

I  have  tried  to  describe  the  definitions,  or  rather 


THE  IDEOLOGY  OF  CASTE  59 

series  of  embellishments  with  which  elementary 
themes,  very  simple  in  themselves,  and  in  which 
the  commercial,  political  and  military  appetites  of 
the  ruling  class  betray  themselves,  have  been  dis- 
torted under  the  disguise  of  biology,  history, 
political  economy,  sociology  and  ethics.  It  would 
need  a  further  critical  analysis  to  show  how  the  rest 
of  science  has  been  distorted  to  the  same  ends  ; 
strictness  as  regards  methods  employed,  rigorous 
care  in  arriving  at  facts,  clear  reasoning,  discretion 
as  to  generalisation,  strict  impartiality  and  freedom 
of  bias  in  working  out  proofs,  the  scientific  spirit, 
in  a  word,  is  not  to  be  distorted  in  such  a  fashion 
without  losing  something  of  its  dignity  and  its 
title  to  respect. 

All  this  is  not  only  to  be  wondered  at,  but  is 
saddening  for  those  who  have  been  brought  up 
with  a  feeling  of  respect  for  German  science,  and 
in  particular  admiration  of  her  scientific  method, 
even  more  than  of  her  actual  discoveries.  Of  a 
truth,  from  Liebig  to  Rontgen  and  Behring,  from 
Kant  to  Wundt,  Germany  counts  many  noted 
discoverers,  yet  in  the  matter  of  originality  and 
creative  suggestiveness  both  France  and  Italy  have 
always  surpassed  her.  She  has  produced  no  Branly, 
no  Marconi — she  counts  no  Pasteur,  no  Poincare 
among  her  men  of  science — she  has  no  one  like 
Carrel.  Fewer  lightning  flashes  were  hers,  but  a 
more  even  and  enduring  distribution  of  light,  solid 
practical  achievements  are  what  she  has  contributed 


60      THE  RULING  CASTE  IN  GERMANY 

for  so  long  that  we  had  come  to  look  instinctively 
to  her. 

And  with  what  result  ?  These  scholars,  these 
college  professors,  these  men  of  iron  feed  us  up  with 
false  anthropology,  history  garnished  with  false- 
hood and  personal  prejudice,  a  science  of  the  state 
based  upon  disregard  of  facts. 

Now,  quite  lately,  we  have  seen  these  wise  men 
combine  under  the  leadership  of  their  best  known, 
to  address  to  the  "  civilised  "  nations  an  appeal  in 
which  they  claim  that  being  men  of  learning,  they 
are  necessarily  competent  to  pass  judgment  on 
things  of  which  they  know  nothing,  to  deny  the 
truth  of  facts  with  which  they  cannot  be  acquainted, 
to  declare  solemnly  "  that  it  is  untrue  that  Germany 
has  unlawfully  violated  the  neutrality  of  Belgium  "  ; 
and  all  the  proof  they  can  put  forward,  all  the  argu- 
ment they  can  vouchsafe  is,  forsooth,  their  own  word 
of  honour  !  Do  they  mistake  the  century  in  which 
they  live  ?  Do  they  mistake  us  for  the  young  French 
gentlemen  who  said  to  Monge  :  "  Professor,  give  us 
your  word  of  honour  that  this  proposition  is  correct 
and  we  will  not  trouble  you  to  prove  it  "  ? 

To  explain  the  part  played  by  men  of  learning,  by 
the  professorial  class  and  the  universities  in  moulding 
the  caste  ideal  which  to-day  prevails  in  Germany,  it 
is  necessary  to  tell  the  history  of  teaching  in  Ger- 
many, not  as  Lexis  and  Paulsen  have  written  of  it} 
but  as  it  has  developed  under  the  shadow  of  educa- 
tional institutions  and  between  the  covers  of  the 


THE  IDEOLOGY  OF  CASTE  61 

syllabus.  I  mean  the  history  of  influence  over  the 
minds  of  the  young.  Frederick  the  Great  said  : 
"  First  I  seize  what  I  can  ;  thereafter  I  can  always 
find  some  pedant  to  justify  what  I  have  done." 
Pedants  or  not,  the  teaching  classes  of  all  ranks  are 
the  very  wheels  of  the  state  in  Germany.  They  are 
there  to  mould  not  men  but  Germans  ;  in  other 
words,  to  fill  young  minds  with  national  ideals. 
Those  connected  with  the  universities,  in  particular, 
are  very  much  under  the  sway  of  the  governing 
class,  with  which  they  continually  seek  closer 
alliance. 

The  authors  of  the  misstatements  which  have 
been  put  about  and  of  the  most  essentially  Pan- 
German  propaganda,  von  Bernhardi,  Chamberlain, 
Reimer,  Woltmann  and  so  many  others,  do  not,  it 
is  true,  belong  to  this  brotherhood  ;  but  their  books 
made  them  famous,  and  they  have  received  in  con- 
sequence much  attention,  and  have  turned  their 
success  to  very  practical  account. 

The  teachings  of  these  people  have  penetrated 
even  among  the  lower  classes.  The  German  receives 
a  double  education,  that  of  the  school  and  that  of 
the  barrack  ;  the  spirit  of  both  is  the  same,  and 
their  influence,  which  has  been  directed  since  1848 
against  liberalism  and  internationalism,  has  met 
with  little  but  success,  for  it  was  directed  on  lines 
which  easily  enough  awaken  hereditary  instincts  to 
whose  development  the  conditions  were  favourable. 
"  Latrocinia  nullam  havent  infamiam,"  wrote  Csesar 


62      THE  RULING  CASTE  IN  GERMANY 

of  the  Germanii :  love  of  pillage  has  not  faded  in 
them  ;  hope  of  profit  is  one  of  the  influences  which 
the  prodigious  commercial  progress  of  Germany  has 
most  effectually  promoted. 

We  all  made  a  strange  mistake — the  same  mis- 
take as  Jaures,  in  seeing  in  the  power  of  the 
German  socialist  electorate  a  counterweight  to 
commercialism  and  militarism  :  in  the  first  place, 
because  the  Reichstag  counts  for  little  ;  it  is  far 
from  having  the  influence  of  the  French  parliament 
or  the  English  House  of  Commons  ;  in  the  second, 
because,  for  some  years  past,  the  German  socialist 
party  has  to  all  intents  and  purposes  abjured  its 
tenets.  It  has  become  an  industrialist  party  and 
therefore  a  nationalist  party,  and  that  under  the 
segis  of  the  trade  unions,  which  have  rapidly  grown 
in  number  and  influence. 

The  socialist  in  theory  fights  the  masters  with  a 
view  to  improving  the  condition  of  the  working 
classes,  but  he  is  in  complete  accord  with  them  hi 
respect  to  keeping  down  competition  and  securing 
foreign  markets.  The  hatred  of  the  Germans  for  the 
English,  a  hatred  which,  hi  spite  of  their  racial  kinship, 
seems  to  all  appearance  a  case  of  race  antagonism, 
exists  from  no  other  cause  ;  so  much  so  that  as  long 
ago  as  1907  some  of  the  best-informed  people  at- 
tributed the  wave  of  war  fever  in  Germany  to 
popular  sentiment,  rather  than  to  willingness  for 
war  on  the  part  of  the  Government. 


THE  IDEOLOGY  OF  CASTE  63 

"  It  would  perhaps  be  no  exaggeration  to  say," 
wrote  a  former  ambassador  on  August  15th,  1907, 
"  that,  if  Germany  were  governed  by  a  democracy, 
most  serious  things  would  have  happened.  It  is, 
in  fact,  very  strange  to  see  the  Government,  and 
at  its  head  the  Emperor  himself,  obliged  to  curb 
the  symptoms  of  unrest  and  anger  which  are  to 
be  noted  not  only  in  the  press,  but  in  the  daily 
talk  of  the  people.  .  .  .  Anything  the  Government 
may  do  nowadays  to  make  an  enemy  of  England 
or  France  is  sure  to  be  applauded  by  the  crowd. 

"  It  has  no  other  origin  than  in  the  astounding 
awakening  of  ideas  of  Empire-building  even 
among  those  least  enamoured  of  war."  1 

Very  strange,  indeed  more  than  strange,  extra- 
ordinary, and  in  a  sense  not  without  grandeur  ;  full, 
in  any  case,  of  suggestiveness  and  importance,  is 
this  wholesale  assimilation  of  a  people  numbering 
seventy  million  souls,  by  an  aristocratic,  almost 
feudal  ruling  class,  at  once  plutocratic  and  militarist. 

Body  and  soul  resigned  to  it,  with  almost  religious 
faith,  almost  enthusiastic  belief  in  it ;  Germany  has 
won  all  from  her  own  people  that  she  may  be  vic- 
torious over  others.  She  ventures  all  on  a  throw  of 
the  dice.  Not  for  me  is  it  to  enquire  whether  she 
acts  fairly  towards  them.  The  result  will  show 
whether  she  has  been  prompted  by  wisdom  or  folly. 

1  La  Revue,  August  15th,  1907,  p.  426  :  quoted  by  Captain 
Andrillon  in  L'Expansion  de  I'AUemagne,  Paris,  1914. 


64      THE  RULING  CASTE  IN  GERMANY 

The  fact  is  remarkable,  not  inexplicable  altogether, 
but  the  explanation  is  not  obvious.  This  spontaneous 
adhesion  of  "  the  people  "  and  of  opposing  factions 
to  the  policy  of  the  governing  class  is  momentous 
indeed.  The  more  one  considers  it  the  more 
astonishing  it  seems. 

The  declaration  of  war  was  acclaimed  with  en- 
thusiasm by  all.  Not  a  protest  was  made,  not  a 
voice  was  raised  against  it,  no  public  meeting  took 
place  to  express  disapproval  of  it. 

Is  the  German  people  bub  a  crowd  without  strength, 
without  a  will  of  its  own,  ignorant  of  where  its 
interests  lie,  or  incapable  of  lifting  up  its  voice  ? 

Or  was  the  German  people  carried  away  by  one 
of  those  sudden  impulses  which  turn  men  into 
brute  beasts,  eager  only  to  throw  themselves  on 
their  prey  ? 

Or  again,  had  the  dream  of  Pan- Germanism  taken 
possession  of  the  whole  people  ? 

To  the  first  question  all  who  know  Germany  will 
answer  in  the  negative.  The  German  people  is  no 
mob  following  any  leader,  no  herd  of  bleating  sheep. 
Although  it  is  not  the  ruler,  it  knows  well  how  to 
make  its  voice  heard.  It  is  well  informed,  thought- 
ful, a  great  reader  of  newspapers,  anxious  to  be 
instructed  on  all  questions  :  it  discusses  matters 
quietly,  and  has  an  appreciation  for  facts.  Organised 
into  various  political  parties,  into  councils,  pro- 
fessional associations ;  criticising  the  chancellor,  the 
ministers,  even  the  Emperor,  it  had  contributed  four 


THE  IDEOLOGY  OF  CASTE  65 

and  a  half  million  votes  to  the  socialist  party  at  the 
last  elections,  and  the  socialists  were  wont  to  declare 
themselves,  if  not  for  peace  at  any  price,  at  least  for 
peace.  Of  popular  disturbance,  of  strong  irresistible 
pressure  there  was  none.  True,  the  German  people 
as  a  whole  is  little  given  to  human  kindness.  It 
worships  strength  and  is  fully  persuaded,  or  rather 
it  believes  from  the  bottom  of  its  heart  that  it  is 
better  to  impose  one's  will  than  to  come  to  terms, 
and  that  the  decisive  argument,  in  every  discussion, 
is  a  blow  from  the  shoulder. 

At  school,  in  the  barracks,  as  I  have  said  before,  it 
has  been  nurtured  on  the  victories  of  1870,  and  in  a 
pride  of  race  to  which  it  gives  expression  with  an 
arrogance  at  once  uncouth  and  foolish.  But  it  is  a 
very  different  thing  to  throw  itself  headlong  into  a 
war,  for  the  masses,  if  bred  up  to  a  veneration  for 
power,  have  no  clear  knowledge  of  where  their 
interests  lie. 

They  live,  for  the  most  part,  by  manufacture  and 
trade  ;  war  means  a  cessation  of  business,  and  those 
who  have  been  the  first  to  suffer  are  the  small  people 
who  have  no  money  saved  up.  How  can  they  have 
wanted  war  ? 

They  did  not  want  it.  Their  one  idea  was  how  to 
improve  the  conditions  of  life.  A  movement  was  on 
foot  to  bring  about  a  debate  on  the  subject  of  the 
commercial  treaties,  renewable  in  1917.  So  Pan- 
Germanism  had  not,  it  would  seem,  infected  the 
working  classes.  Yet  it  had  deeply,  through  the  propa- 


66      THE  RULING  CASTE  IN  GERMANY 

ganda  of  retired  soldiers'  clubs,  of  some  of  the  athletic 
associations  and  by  means  of  the  press.  Sometimes 
France  was  blamed,  sometimes  Russia,  but  always 
and  on  every  occasion  England. 

I  do  not  deny  the  effective  nature  of  the  propa- 
ganda, but  I  do  deny  that  the  working  classes 
had  been  won  by  it.  The  artisan  and  the  peasant 
were  occupied  with  the  problem  of  how  to  earn  a 
living,  their  minds  were  becoming  more  and  more 
occupied  with  questions  of  wages  and  internal 
politics.1 

It  was  partly  to  turn  their  thoughts  from  these 
matters  that  the  agitation  in  favour  of  war  was 
spread  about. 

Blondel,  quoting  Ludwig  Stein,  cites  the  typical 
case  of  how  the  German  press  suppressed  all  articles 
appearing  in  the  English  press  which  showed  any 
friendly  feeling  towards  Germany. 

Is  the  German  working  class  at  war  in  spite  of  itself  ? 

Again,  no.  As  soon  as  war  was  declared,  it  was  all 
for  war,  it  rejoiced  in  it  and  threw  itself  into  it  heart 
and  soul.  It  faced  about  at  once.  I  recall  the 
socialist  congress  held  at  Stuttgart  at  which  Bebel 
explained  so  clearly  that  German  socialists  did  not 
wish  for  war,  but  that  if  war  broke  out  they  would 
follow  the  colours  to  a  man. 

1  See  Blondel,  Lea  Embarraa  de  VAllemagne,  and  in  particular 
Chapters  VT.  and  VII. :  La  Malaise  dee  Populations  Rurales  and 
La  Poussee  Socialiste.  The  book  was  published  in  1912  and 
quotes  many  authorities,  but  it  makes  no  mention  of  any  eager- 
ness for  war  among  the  working  classes. 


THE  IDEOLOGY  OF  CASTE  67 

The  German  socialists  said  not  a  word,  and  their 
silence  was  attributed  to  the  teachings  of  Treitschke, 
the  doctrine  preached  by  Nietzsche  and  to  other 
causes  of  a  like  nature. 

Endless  discussions  have  taken  place  as  to  what 
"  Kultur  "  and  "  Bildung  "  implied.  Better  have 
turned  to  history  ;  but  to  somewhat  early  history, 
for  the  Germans  have  had  no  revolution  since 
the  Reformation,  that  is  to  say  the  sixteenth 
century. 

Think  what  it  means  that  a  people  should  have 
been  so  long  under  the  same  sway,  and  how  strongly 
it  must  have  moulded  their  condition  of  mind,  their 
intellect,  and  their  habits  in  common.  That  is  pre- 
cisely what  has  happened.  What  was  the  Lutheran 
reform  of  the  sixteenth  century  ?  It  was  a  demo- 
cratic movement  under  the  guise  of  religion,  carried 
through  by  the  smaller  nobility  who  had  lost  their 
all,  and  by  the  people.  Against  whom  was  it  aimed? 
Against  the  wealthy  dignitaries  of  the  Roman 
Catholic  Church,  and  against  the  Emperor.  Whom 
did  it  profit  ?  The  princes. 

I  do  not  question  its  moral  importance  ;  I  confine 
myself  to  an  examination  into  its  character  and  the 
results  which  came  of  it. 

What  did  Luther  do  to  get  the  better  of  the  Pope 
and  the  Emperor  ?  He  leaned  upon  the  princes  and 
gave  them  the  power  which  he  took  from  the  church. 
He  did  this  as  much  by  reason  of  his  religious  faith 
as  because  it  was  tactically  necessary.  To  his  mind 


68      THE  RULING  CASTE  IN  GERMANY 

Christianity  is  a  matter  which  concerns  man's  inner 
life,  it  implies  that  in  his  heart  man  is  in  close  com- 
munion with  God.  This  communion  with  God  has 
for  object  the  salvation  of  Man's  soul,  in  other  words, 
the  certainty  of  attaining  to  heavenly  happiness  in 
the  life  everlasting.  Princes  are  the  appointed  of 
God,  and  their  function  to  control  secular  life. 

As  Christian,  man  withdraws  into  the  realm  of 
his  heart,  where  his  freedom  is  unlimited.  As 
citizen,  as  subject,  he  commits  himself  completely 
to  the  temporal  power,  that  is  to  the  Prince  or 
State. 

How  different  from  the  tenets  of  Calvinism,  and 
how  more  different  still  from  those  of  the  Swiss 
reformed  church.  Luther's  creed  is  that  of  a  monk, 
Calvin's  that  of  a  lawyer,  Zwingli's  that  of  a  student 
of  human  nature  and  a  bourgeois. 

This  feature  of  Lutheranism,  with  its  contrast  be- 
tween internal  freedom  of  mind  and  external  policing 
of  the  individual,  has  become  to  such  an  extent  char- 
acteristic of  the  German  character  that  one  sees  it 
even  to-day  in  the  works  of  the  Pan-German  writers. 
Mr.  Houston  Chamberlain,  in  his  Foundations  of  the 
Nineteenth  Century,  cites  it  as  a  proof  of  pre-eminence 
of  race. 

Thus  there  came  about  the  national  and  demo- 
cratic movement  which  Luther  himself  had  started, 
and  which  was  to  end  in  the  establishment  of 
despotism.  Emperor  and  Pope,  the  authority  of 
each  of  whom  acted  as  a  counterpoise  to  that  of  the 


THE  IDEOLOGY  OF  CASTE  69 

other,  have  both  gone.  What  remains  ?  The 
People  ?  No,  the  Prince. 

The  Prince  is  all-powerful.  Even  in  countries  that 
have  remained  Catholic,  his  power  has  increased 
enormously.  He  decides  what  shall  be  the  faith  of 
his  people :  cujus  regio,  ejus  religio.  Look  at 
Germany  as  she  recovers  from  the  effects  of  revolu- 
tion, after  the  Thirty  Years  War.  We  see  her 
divided  under  many  rulers,  and  of  these  rulers,  the 
one  who  will  raise  her  above  the  others  is  the  greatest 
despot ;  and  of  these  states  the  one  which  will  be 
the  model  to  all  the  others  is  the  most  warlike,  the 
most  submissive  to  authority ;  the  one  which  is 
ruled  in  a  manner  at  once  the  most  detailed, 
fussy  and  fatherly.  In  1700  Prussia  became  a 
kingdom. 

One  must  consider  the  effect  of  all  that  on  mould- 
ing a  people.  Initiative  comes  from  above,  never 
from  below,  it  never  springs  from  the  people. 

Organisation  of  trade,  introduction  of  new  systems 
of  agriculture,  teaching,  charity  organisation,  taxes, 
state  functions,  grants  of  preferment  and  of  rank, 
war  and  peace,  the  church,  the  law,  the  courts  of 
justice,  all  are  in  the  jurisdiction  of  the  sovereign. 
If  the  sovereign  tyrannises  the  people,  if  he  offends 
their  scruples,  what  redress  have  they  ?  Only  to 
offer  up  prayer  for  him. 

We  cannot  tell  whether  the  German  people  has 
often  prayed  for  its  sovereign,  but  from  1524  to  1848 
never  once  did  revolution  enter  its  head,  and  even 


70      THE  RULING  CASTE  IN  GERMANY 

now,  the~days  of  1848  seem  but  a  bad  dream.  The 
great  German  philosophers  from  Pufendorf  to  Leib- 
nitz and  Wolff,  even  Kant,  do  not  suggest  that  any- 
thing is  better  than  enlightened  despotism.  Only, 
in  the  nineteenth  century,  it  is  not  the  prince  but 
the  state.  But  to  the  state  is  given  divine  attributes. 
The  people  have  no  hand  in  the  constitution  of  the 
state,  it  is  the  state  which  creates  public  opinion, 
the  state  which  shapes  the  ideas  of  the  nation. 
It  has  the  right  to  do  so,  and,  in  effect,  has 
done  so. 

Prussia  itself  has  been  built  up  brick  by  brick,  as 
though  by  workmen's  hands,  by  Margraves  of 
Brandenburg,  by  Electors,  by  her  Kings ;  and 
Prussia  has  created  the  Empire.  So  much  so  that 
Germany  has  in  the  course  of  three  centuries  built 
up  a  kind  of  allegorical  statecraft,  so  that  she  looks 
upon  the  state  as  a  thing  apart,  outside  and  above 
the  nation,  gifted  with  a  will  of  its  own,  entrusted 
with  high  political,  social  and  ethical  mission,  in 
return  for  which  the  nation  owes  it  unqualified 
support. 

This  conception  can  be  traced  even  among  the 
German  socialists,  who  differ  essentially  from  the 
French,  in  that  for  these  latter,  the  state  is  the 
voice  of  the  people,  whilst  for  the  German  socialists 
it  is  rather  the  people  which  speaks  with  the  voice 
of  the  state  ;  and  that  is  why  Jaures  could  not 
understand  Bebel's  point  of  view  when  he  declared 
himself  ardently  for  peace,  but  only  so  long  as  war 


THE  IDEOLOGY  OF  CASTE  71 

should  not  have  been  declared.  The  German  kneels 
with  such  reverence  before  the  state  that  his  first 
thought  is  to  increase  its  riches  even  when  he  is  out 
to  despoil  it. 

When  the  administrative  reform  of  Prussia  was 
undertaken,  commencing  with  the  year  1872,  and 
was  extended  to  various  of  the  German  states,  the 
English  constitution,  with  which  the  writings  of 
Gneist  had  made  the  Germans  acquainted,  was  to 
have  been  the  model.  The  idea  of  self-government 
was  borrowed  from  it,  and  independent  adminis- 
trative bodies  were  formed.  But  to  whom  was 
entrusted  the  duty  of  directing  these  bodies  ?  To 
employees  of  the  state  and  paid  officials. 

"  In  the  Grand  Duchy  of  Baden,  the  council  for 
the  district ;  in  Prussia,  the  council  for  the 
Province,  and  departmental  and  sub-depart- 
mental Committees ;  in  Saxony,  sub-depart- 
mental and  departmental  committees  ;  in  Hesse, 
sub-departmental  and  provincial  committees  ;  all 
these  bodies  are  state  directed,  being  composed  as 
often  as  not  of  state  paid  officials,  the  President 
in  any  case  being  a  paid  Government  servant."1 

That  is  what  English  local  self-government  means 
when  translated  into  German  "  Selbstverwaltung." 

I  could  multiply  examples.  Everywhere  the  state 
has  a  finger  in  the  pie. 

1  G.  Jellinek,  professor  at  Heidelberg,  The  Modern  State  and 
its  Laws. 


72      THE  RULING  CASTE  IN  GERMANY 
According  to  Jellinek  its  main  functions  are  : — 

1.  To  govern. 

2.  To  demonstrate  its  authority. 

3.  To  advance  civilisation. 

That  is  the  meaning  of  the  word  Kulturstaat, 
which  must  not  be  translated  "  civilised  state,"  but 
rather  as  an  organising,  or,  as  Rabelais  said,  "  plas- 
mateur  "  state.  It  is  true  Rabelais  used  the  ex- 
pression in  speaking  of  God. 

The  Germans  are  a  "  Kulturvolk  "  because  the 
German  state  is  a  Kulturstaat.  Without  Kultur- 
staat there  is  no  Kulturmensch.  This  wonderful 
Kultur  which  people  blind  to  its  meaning  have 
talked  so  much  about,  does  not  mean  civilisation  in 
the  least.  Civilisation  consists  of  delicacy  and 
gentleness  of  behaviour,  and  refinement  of  mind. 
Kultur  implies  state  direction,  to  the  end  that  man 
and  the  people  shall  be  assimilated  into  it,  incor- 
porated within  it,  and  shaped  to  serve  its  ends  that 
they  may  share  in  the  accomplishment  of  its  pur- 
pose. 

What  ends  ?  Those  ends  which  her  history  lays 
open  to  Germany.  History  to  her  is  a  divine  reve- 
lation ;  it  shows  her  that  the  Germans  are  a  superior 
race,  seeing  that  they  have  not  known  defeat  since 
1815 — until  the  month  of  September,  1914. 

To  attain  her  ends  the  State  need  consult  none  but 
herself.  But  what  of  moral  law  ?  Why,  the  state  itself 
has  laid  it  down  ;  it  consists  in  the  duty  of  the  indi- 


THE  IDEOLOGY  OF  CASTE  73 

vidual  to  the  state ;  to  whom  could  the  state  owe 
duty  ? 

What  of  the  law  of  justice  ?  Well,  that  is  born  of 
the  thing  done. 

"  In  the  beginning,"  said  Goethe,  "  was  the  act," 
for  Goethe  is  more  German  than  one  is  apt  to  think. 
And  religion  ?  Well,  that  is  a  blend  of  the  other  two. 
When  Professor  Kaftan,  the  well-known  theologian, 
and  an  admirable  person  in  private  life,  wrote  his 
article  on  "  The  German  God,"  he  only  put  into 
words  the  universal  German  view. 

All  Germans  are  not  God,  but  God  is  German, 
because  He  has  confided  His  mission  to  Germany  ; 
His  mind  takes  a  kind  of  human  form  in  the  shape 
of  the  German  state,  whilst  German  Kultur  is  the 
expression  of  His  soul. 

The  Academy  of  Berlin  was  a  little  late  in  dis- 
avowing the  harshness  with  which  Professor  Lasson 
lashed  the  Dutch.  A  very  embarrassing  disavowal 
it  was  for  them.  Professor  Lasson  is  one  of  the  best 
of  men,  a  philanthropist,  charitable  to  the  last 
degree,  and  above  all  an  impenitent  disciple  of 
Hegel,  who,  advanced  in  years,  fancied  that  he  was 
witnessing  the  coming  of  "  The  Absolute." 

How  could  one  accept  the  fact  that  a  little  nation, 
of  Germanic  origin,  should  call  itself  disinterested 
and  stand  apart  whilst  so  great  a  thing  was  going 
on? 

Be  certain  of  one  thing — they  think  the  same  of  us 
Swiss,  and  would  equally  tell  us  so,  were  it  not  for 


74      THE  RULING  CASTE  IN  GERMANY 

our  400,000  bayonets  ;  for  we  also  are  trained  to 
arms. 

Is  there  need,  therefore,  things  being  as  they  are, 
to  hark  back  upon  the  workings  of  Pan-Germanist 
Mythology  for  an  explanation  of  the  unanimity  of 
the  German  people  ?  Pan-Germanism  represents 
the  mental  state  of  mind  of  a  Caste,  an  adaptation 
of  history,  ethnology,  and  biology  to  the  aims  of 
the  ruling  class  in  Germany.  Moreover,  it  appeals 
to  the  minds,  instincts  and  wishes  of  the  people. 
Yet  of  the  two  sections  of  the  people,  the  educated 
classes  and  the  lower  classes,  it  is  the  second  which 
is  by  far  the  more  deeply  influenced  by  it,  and  the 
more  important,  for  among  them  it  is  the  outcome 
of  a  preparation  which  has  been  going  on  for  three 
centuries,  and  it  is  associated  in  their  minds  with 
the  traditions,  customs  of  life,  and  feelings  common 
to  them  all. 

The  German  people  lives,  breathes,  and  moves  in 
an  atmosphere  of  governmental  influence,  not  only 
affecting  policy  and  social  order,  but  pedagogy, 
religion,  and  personal  conduct,  which  has  become 
a  second  nature  to  it. 

It  rose  to  arms  because  the  chief  of  the  state  gave 
the  word,  and  it  would  have  risen  in  any  similar 
circumstances.  In  all  similar  circumstances  it  will 
rise  again. 

It  is  all  very  well  to  establish  international  law, 
define  principles,  seal  treaties. 

These  workmen,  these  labourers  are  neither  more 


THE  IDEOLOGY  OF  CASTE  75 

avaricious  nor  much  more  bloodthirsty  than  others, 
yet,  when  the  chief  of  the  state  says  to  them, 
"  March,"  "  Kill,"  they  will  kill,  pillage,  and  burn  ; 
"  International  Law  "  will  go  by  the  board.  They 
go  where  their  rulers  lead. 

Where  are  they  being  led  ?     It  were  useless  to 
tell  them,  not  perhaps  so  useless  for  us  to  know. 


II 

GEEMANY'S  AIMS   AT   CONQUEST   BY 
TEADE   AND   BY  WAE 

1.  BEASONS  FOB  GERMANY'S  ACTION 

2.  THE  ENDS  IN  VIEW 

3.  THE  MEANS  EMPLOYED 

4.  GERMANY'S  FINANCIAL  SYSTEM 

5.  THE  OBSTACLES  IN  HER  PATH 

6.  WHY  GERMANY  WAS  ALARMED 


II 

GERMANY'S  AIMS  AT  CONQUEST   BY 
TRADE  AND   BY  WAR 

1.  REASONS  FOB  GERMANY'S  ACTION 

WHY  has  Germany  set  Europe  on  fire  ? 

That  the  question  should  have  haunted  us  all 
since  the  day  war  began  is  only  natural,  but  the 
reasons  suggested  hardly  meet  the  case. 

To  my  mind  there  are  four,  neither  of  which  pre- 
cludes the  other,  neither  of  which  is  altogether 
wrong  in  itself,  yet  each  only  in  part  explains  what 
has  taken  place.  In  my  endeavour  to  piece  them 
together  I  arrive  at  a  theory  which  is  worth  pre- 
cisely the  value  to  be  attributed  to  the  facts  upon 
which  it  is  built  up. 

Of  the  facts  in  question,  some  are  indisputable, 
others  we  recognise  without  being  able  accurately 
to  judge  of  their  bearing  on  the  case,  more  still  have 
been  told  me  in  such  strict  confidence  that  I  may 
not  quote  my  authority. l  When  considered  together 

1  Among  those  people  to  whom  I  am  indebted  for  valuable 
and  sure  information  there  are  some  who  have  refused  me  per- 
mission to  give  their  names  ;  and  that  is  why  I  have  given  no 
names  at  all,  preferring  to  appear  ungrateful  to  some,  rather 
than  prove,  in  fact,  ungrateful  to  any. 

79 


80      THE  RULING  CASTE  IN  GERMANY 

these  facts  strengthen  one  another,  confirm  one 
another,  and  fit  together  so  well  as  to  resemble  the 
cog-wheels  of  some  vast  piece  of  machinery.  Con- 
sidered separately  they  may  only  excite  a  sense  of 
curiosity,  but  once  piece  them  together  and  one 
sees  a  living  policy  in  the  building,  a  terrible 
organising  for  conquest  and  power  which  staggers 
one  by  its  heinousness,  and  terrifies  by  reason  of 
the  inexorable  severity  which  it  threatens. 

The  first  of  the  four  explanations  of  Germany's 
action  the  Germans  themselves  have  given.  They 
claim  to  be  the  victims  of  a  plot  hatched  by  Russia 
whilst  their  Emperor  was  peacefully  cruising 
among  the  Norwegian  fiords.  That  war  was  thrust 
upon  them,  that  they  were  taken  by  surprise  and 
only  struck  first  in  self-defence. 

This  explanation  has  been  proved  false  by  the 
revelations  made  by  M.  Giolitti,  which  have  not 
been  denied,  and  which  M.  Take  Jonescu's  state- 
ments corroborate. 

The  murder  of  the  Archduke,  heir  to  the  Austrian 
throne,  was  a  mere  pretext ;  war  had  already  been 
decided  upon  in  May,  1913.  A  plot  had  been  indeed 
hatched,  but  not  by  Russia. 

As  to  the  suggestion  of  a  surprise,  there  is  just 
this,  that  Austria  and  Germany  did  not  perhaps 
reckon  upon  seeing  Europe  rise  to  arms  at  their 
threats.  On  this  point,  also,  we  know  more  now 
than  we  did  some  months  ago. 

Up  to  the  very  last  day  the  two  Emperors  could 


CONQUEST  BY  TRADE  AND  WAR       81 

have  withdrawn  honourably  from  the  position  they 
had  taken  up.  They  could  have  agreed  to  abide 
by  the  decision  of  an  international  congress,  or 
they  could  have  referred  the  question  to  the 
tribunal  of  the  Hague,  as  the  Tsar  suggested  in  a 
telegram  which  the  German  White  Book  does  not 
reproduce. 

It  is  clear  then  that  war  was  intended,  the  conse- 
quences had  been  considered,  and  it  was  entered 
into  of  deliberate  purpose. 

The  second  is  the  accepted  explanation  in  all 
foreign  countries,  particularly  in  England  and  the 
United  States,  namely,  the  theory  of  ideology. 
Germany,  which  guided  the  hand  of  Austria,  is 
under  the  influence  of  a  distorted  philosophy.  Rich 
and  poor  alike,  from  Emperor  to  the  meanest  social 
democrat,  she  is  a  disciple  of  Neitzsche,  of  Gobineau, 
of  Pan-Germanism,  convinced  that  Might  is  Right, 
that  war  is  the  natural  proof  of  might,  that  victory 
is  a  holy  thing,  that  victory  is  the  emblem  of  the 
Germans  as  crowns  are  the  emblems  of  kings,  and 
that  science,  history  and  God's  loving-kindness  have 
assured  them  world  dominion. 

Eucken,  quite  clearly,  combated  the  idea  that 
such  crude  Imperialism  is  the  doctrine  of  the 
German  people.  He  chose  a  bad  time  to  do  so. 
Had  he  raised  his  voice  earlier  he  would  have 
shown  more  courage  and  might  have  done  some 
good.  The  spread  of  the  idea  of  Pan-Germanism 
in  Germany,  and  among  the  German  party  in 


82      THE  RULING  CASTE  IN  GERMANY 

Austria  during  the  past  fifteen  years,  surprises  no 
one,  only  such  a  doctrine  is  not  of  any  great  account 
except  in  that  it  is  an  expression  of  the  aim  of  mind 
of  a  people,  and  therefore  a  symptom,  an  important 
clue  ;  in  other  words,  it  is  effect  and  not  cause. 
It  is,  in  respect  to  what  results  from  it,  what  the 
periscope  is  to  a  submarine.  Of  what  accumulation 
of  energy,  of  what  obscure  impulses  is  Pan-Ger- 
manism the  outward  and  visible  sign  ?  That  is  a 
problem,  but  not  a  solution.  The  theory  of  ideology 
explains  nothing. 

However  it  may  appear,  the  theory  that  war  was 
a  political  necessity  is  less  satisfactory  than  one 
might  think. 

It  is  suggested  that  this  war  is  nothing  more  or 
less  than  a  vigorous  blow  from  the  shoulder,  now 
on  one  side,  now  on  another,  with  the  object  of 
getting  rid  of  the  strangling  rope  with  which  the 
other  powers  were  binding  Germany ;  Germany 
must  have  air,  freedom,  freedom  of  the  sea,  freedom 
in  Africa,  in  Asia.  .  .  .  Well,  but  it  was  theirs, 
and  they  knew  that  it  was  theirs,  indeed  they 
knew  it  too  well.  If  they  had  had  any  slight 
doubts  the  catastrophe  would  perhaps  have  been 
averted. 

Who  doubted  their  political  and  military  hege- 
mony ?  As  a  result  of  it  they  had  obtained  a  large 
slice  of  the  Congo  territory  from  France,  Austria 
was  guaranteed  by  them  in  the  possession  of  Bosnia 
and  Herzegovina.  The  advent  of  the  Young  Turks 


CONQUEST  BY  TRADE  AND  WAR       83 

to  power  assured  their  influence  in  Constantinople, 
if  not,  indeed,  the  very  possession  of  the  Ottoman 
Empire. 

At  the  second  Hague  Conference  in  1907  England 
proposed  to  them  a  mutual  understanding  on  the 
question  of  limitation  of  naval  armaments,  but 
Marschall  von  Biberstein  declined  even  to  discuss 
the  suggestion. 

True,  Germany,  in  spite  of  all  her  efforts,  had 
not  been  able  to  acquire  a  colonial  Empire  com- 
parable to  those  of  England  and  France,  but  the 
world  was  in  fact  open  to  her  trade,  and  even  the 
Chancellor  himself  in  the  Reichstag  acknowledged 
that  she  had  no  concern  with  colonies  as  an  outlet 
for  emigration,  since  she  had  no  colonists  with  whom 
to  settle  them,  since  the  number  of  emigrants  to 
all  parts  was  very  small  indeed,  and  for  the  further 
reason  that  she  was  actually  short  of  labour  to  till 
the  fields  and  run  her  factories  at  home. 

The  aim  of  the  alliances  and  ententes  which  were 
entered  into  following  upon  King  Edward  the 
Seventh's  accession  to  the  throne,  was  the  estab- 
lishment of  a  balance  of  power  in  Europe.  One 
can  see  in  them  no  vestige  of  a  threat  against 
Germany. 

The  fact  is  that  the  Emperor  had  attained  the 
object  of  his  "  Weltpolitik,"  as  he  had  defined  it 
on  the  occasion  of  the  launch  of  the  cruiser  Wittels- 
bach  at  Wilhelmshaven  in  1900.  "  In  future,"  he 
£aid,  "  Germany  and  her  Emperor  must  be  taken 


84      THE  RULING  CASTE  IN  GERMANY 

into  account  in  all  that  concerns  the  high  seas  or 
those  lands  beyond  the  seas,"  and  he  added,  "  What 
William  the  Great  accomplished  at  home,  we, 
William  II,  will  effect  abroad."  And  he  did  it. 
William  I  made  Germany  the  equal  of  other  nations. 
William  II  has  obliged  the  other  powers  to  recognise 
that  Germany  must  be  counted  with  equally  with 
themselves.  Is  that  not  what  he  meant  to  say  ? 
Did  he  mean  to  imply  something  more  ? 

The  fourth  is  the  economic  theory.  To  hope  to 
establish  dominion  over  all  other  countries  and 
to  maintain  such  dominion  would  be  a  hopeless 
task,  a  ruinous  one  if  it  were  capable  of  achieve- 
ment. 

But,  to  use  the  army  for  the  profit  of  industry 
and  trade,  in  other  words,  to  crush  competition  and 
destroy  the  financial  resources  of  two  or  even  three 
rival  powers,  to  win  European  markets  by  a  rapid 
military  success,  to  achieve  lasting  prosperity  for 
manufacturers  and  merchants,  indeed  for  all  Ger- 
man producers  ;  is  not  that  the  natural  outcome, 
under  present-day  conditions,  of  the  work  of 
William  I  and  Prince  Bismarck  ? 

If  so  it  would  explain  much  if  one  did  not  bear  in 
mind  a  very  important  consideration,  namely,  that 
war,  which  could  be  quite  a  good  financial  operation 
in  1870,  has  become  less  good  a  one  since  then,  and 
is  perhaps  a  bad  one  to-day.  So  much  could  not 
have  escaped  the  sovereign's  advisers ;  indeed,  we 
know  that  it  was  pointed  out  to  him. 


CONQUEST  BY  TRADE  AND  WAR      85 

On  May  llth,  1912,  Herr  E.  Possehl,  one  of  the 
greatest  merchants  in  Lubeck,  delivered  a  lecture 
in  Berlin  on  what  would  be  the  effect  on  German 
industry  and  trade  if  there  were  war.  It  will  be 
remembered  that  there  were  ominous  threatenings  of 
war  in  1911  when  the  Morocco  affair  took  place. 

Herr  Possehl  spoke  at  the  invitation  of  General 
Klein,  a  well-known  disciple  of  Pan-Germanism. 
He  commenced  by  insisting  that  his  address  should 
not  be  reported,  because,  of  necessity,  he  would 
have  to  call  attention  to  the  weak  points  in  the 
German  state  as  well  as  the  strong.  "  I  am  con- 
vinced," said  he,  "  that  the  war  which  England 
would  wage  with  all  her  might  on  our  seaborne 
trade  would — far  more  surely  than  war  on  land  with 
France — have  most  serious  results  for  Germany  and 
end  in  dragging  us  to  our  knees." 

Then  he  went  on  to  speak  of  the  stoppage  of  work 
and  of  blockade,  of  the  more  than  £900,000,000 
worth  of  German  trade  represented  by  exports  and 
imports,  of  which  over  £650,000,000  worth  would 
be  at  the  mercy  of  the  English  navy.  He  spoke  of 
the  scarcity  of  corn  and  food-stuffs  which  Germany 
buys  abroad  to  the  value  of  some  £50,000,000  per 
annum,  the  risk  of  stoppage  of  factories,  scarcity 
of  rolling  stock,  the  six  or  eight  million  persons  who 
would  be  thrown  upon  the  state,  all  of  which  appeared 
to  him  to  have  such  an  element  of  danger  that  he 
went  on  to  suggest  the  setting  up  of  a  standing 
committee  composed  of  the  most  prominent  business 


86      THE  RULING  CASTE  IN  GERMANY 

men,  drawn  from  the  ranks  of  the  manufacturing  and 
trading  classes,  agriculturists  and  bankers. 

"  These  economic  problems,"  he  cried,  "  must  so 
greatly  affect  the  destiny  of  our  people  that  surely 
they  are  as  important  as  military  considerations."1 

It  is  impossible  that  Herr  Possehl's  cry  of 
alarm  was  not  heard.  It  had  been  forestalled  by 
panic  on  the  Stock  Exchange,  by  commercial 
failures,  by  mischief  of  all  sorts  brought  about 
merely  by  the  threatened  possibility  of  war. 

Would  such  a  thing  as  war  be  provoked,  would 
such  grave  perils  be  risked  with  the  sole  object  of 
stimulating  the  manufactures  and  trade  of  the 
Empire,  when  already  they  have  increased  to  so 
unlooked-for  an  extent  as  to  rival  those  of  England 
and  America  ? 

There  is  still  something  we  do  not  know. 

Consider  the  political,  social  and  economic  con- 
ditions one  with  another  and  one  arrives  at  no 
plausible  explanation. 

Highly  prosperous,  with  no  danger  threatening, 
a  people  does  not  risk  its  all  with  the  blind  fury  which 
it  is  ours  to  witness.  No,  everything  points  to  the 
fact  that  the  war  was  a  step  taken  in  despair,  a 
stroke  carefully  planned ;  threatened,  for  sure, 
several  times  before,  in  1874,  in  1875,  in  1887  at  the 

1  It  is  only  a  little  while  since  the  newspapers  spoke  of  the 
arrest  of  Herr  Possehl,  of  Lubeck,  a  personal  friend  of  the 
Emperor,  on  a  charge  of  dealings  with  the  enemy.  The  matter 
has  not  again  been  referred  to.  Was  Herr  Possehl  too  good  a 
prophet,  and  did  he  unwisely  give  a  reminder  of  his  warning  ? 


V 
CONQUEST  BY  TRADE  AND  WAR      87 

time  of  the  Schnaebele  incident,  in  1905  on  the 
occasion  of  the  Tangier  dispute,  in  1911  when  the 
Agadir  affair  took  place,  but  always  threatened 
and  then  deferred  ;  yet  at  last  hurriedly  rushed 
into  in  1914,  as  if  for  fear  that  the  opportunity 
might  be  missed. 

A  gambler's  throw,  was  it,  undertaken  at  the 
spin  of  a  coin  ?  No,  a  nation  does  not  act  so  when 
it  is  prosperous  and  has  much  to  lose. 

Was  it,  perchance,  that  all  was  not  well ;  that 
desperate  trouble  threatening  the  very  life  of  the 
nation  was  foreseen  ;  that  Germany  rushed  into 
war  in  order  to  forestall  it  ? 

What  could  the  trouble  be  ? 


2.  THE  ENDS  IN  VIEW 

Let  us  turn  to  history. 

In  1879  Prince  Bismarck  initiated  a  policy 
affecting  business  matters  by  instituting  a  pro- 
tective tariff.  He  so  adjusted  it  as  to  reconcile  the 
interests  of  the  National  Liberals  and  of  the  landlord 
conservatives.  So  he  hoped  to  oust  the  socialists 
and  to  render  the  Catholic  centre  party  more  tract- 
able, whilst  at  the  same  time  adding  to  the  revenue 
of  the  country  large  sums  for  which  it  would  not  be 
necessary  to  apply  to  Parliament.  What  a  godsend 
to  be  able  to  dispense  with  the  Reichstag  ! 

No  time  was  lost  in  applying  the  tariff,  and  keen 


88      THE  RULING  CASTE  IN  GERMANY 

was  the  discontent  with  it ;  yet  it  had  been  calcu- 
lated on  a  basis  that  would  adjust  internal  trade 
by  means  of  compensation  given  to  the  great  land- 
lords on  the  one  hand  and  to  the  manufacturers 
on  the  other. 

From  the  fusion,  or  at  least  alliance  of  the  two 
classes,  there  resulted  the  foundation  of  the  existing 
ruling  class.  From  time  to  time  since  there  have 
been  quarrels  and  reconciliations,  but  this  composite 
aristocracy,  part  noble  born,  part  money  bred,  is 
more  than  ever  the  one  which  governs.  It  matters 
little  whether  it  commands  a  majority  in  the 
country.  At  the  last  elections,  for  instance,  it 
represented  four  and  a  half  million  votes,  whilst 
the  liberal  parties  in  all  won  202  seats,  representing 
seven  and  a  half  million  votes. 

But  Germany  is  not  a  country  in  which  public 
opinion  counts.  One  saw  that  well  enough  when 
war  was  declared.  All  parties,  the  whole  country, 
supported  the  Government.  What  then  of  the 
vaunted  working-class  pacificism  and  internation- 
alism ?  Mere  fables.  No  need  even  for  pretexts. 
The  people  said,  "  We  follow  the  Government 
because  it  fights  against  the  Muscovite  barbarian," 
so  they  proceeded  to  make  war  upon  Belgium, 
France  and  England  ! 

It  is  not  simply  because  the  Chancellor  and  the 
ministers  of  state  do  not  have  to  answer  to  Parlia- 
ment that  Germany  is  not  a  country  in  which  public 
opinion  finds  its  own  expression,  but  on  account  of 


CONQUEST  BY  TRADE  AND  WAR      89 

the  view  held  of  the  nature  of  the  state,  namely, 
that  it  is  not  representative  of  the  people,  but  a  kind 
of  system  superimposed  upon  and  high  above  them. 

The  press  and  the  professors  have  striven  to 
express  and  develop  this  theory  of  the  State,  whose 
origin  may  be  traced  back  to  the  days  of  Luther  at 
least,  if  not  further,  and  that  is  why  the  elected 
representatives  of  the  people  hailed  without  reserve 
the  decision  of  a  minority. 

People  who  were  present  at  the  great  sitting  of 
the  Reichstag  in  July,  1914,  tell  me  that  the  deputy 
Liebknecht  did  not  raise  his  voice  against  the  vote 
on  supply.  No  vote  was  taken.  It  was  carried 
by  acclaim.  Nothing  happened  which  could  be 
compared  with  the  heroic  opposition  of  Thiers  and 
some  others  in  the  French  Chamber  in  1870. 

Let  us  trace  the  evolution  of  this  governing  class, 
for  if  a  clue  to  what  has  come  to  pass  is  to  be  found, 
it  is  there  that  we  shall  discover  it. 

The  death  of  William  I  in  1888  was  quickly 
followed  by  that  of  his  unhappy  son,  and  William  II 
came  to  the  throne.  In  1890,  growling  like  a 
wounded  bear,  Prince  Bismarck  was  removed  from 
office. 

Only  a  few  years  before  he  who  was  so  soon  to 
come  to  the  throne  had,  in  the  course  of  an  after- 
dinner  speech,  uttered  these  memorable  words  : 
"  The  state  resembles  a  ship  whose  captain  has 
been  killed,  whose  second  officer  lies  seriously 
wounded,  yet  she  keeps  on  her  course." 


90      THE  RULING  CASTE  IN  GERMANY 

Has  she  kept  her  course  ? 

In  a  sense  "  yes  " — in  a  sense  "no."  True, 
Count  Caprivi  carried  on  Bismarck's  policy,  but  in 
a  manner  of  which  the  man  of  iron  did  not  approve. 
He  had  introduced  laws  benefiting  labour,  but  at 
the  same  time  had  set  up  powerful  machinery 
aimed  at  socialism.  Under  the  new  Chancellor,  the 
famous  universal  labour  conference  was  called.  The 
labour  movement  was  encouraged  to  spread  in  all 
directions,  whilst  the  sword  with  which  socialism 
had  been  kept  within  bounds  was  sheathed  again. 

On  the  other  hand,  when  the  commercial  treaties 
were  renewed  in  1892  Count  Caprivi  carried  on 
Bismarck's  policy  by  showing  himself  a  staunch 
supporter  of  the  interests  of  German  trade.  But 
he  did  not  go  about  it  in  the  same  way.  He  gave 
up  all  attempt  to  pander  to  both  the  agrarian  and 
the  industrial  parties,  dropped  the  policy  of  com- 
promise in  favour  of  one,  if  not  of  free  trade,  at 
least  avowedly  anti-protectionist.  "  Germany,"  he 
proclaimed  in  the  Reichstag,  "is  an  industrial 
country." 

The  agrarian  party,  in  other  words  the  nobles, 
and  in  particular  the  Prussian  nobility,  resented 
this  deeply.  On  several  occasions  the  Emperor 
found  it  necessary  to  remind  them  of  their  duty  to 
the  throne.  He  was  leading  them,  he  said,  to  a 
new  and  greater  destiny  in  spite  of  themselves,  and 
little  by  little  he  won  them  over. 

His  influence  it  was,   in  great  measure,   which 


CONQUEST  BY  TRADE  AND  WAR       91 

brought  about  the  change  in  the  political  opinions 
of  the  governing  class. 

He  created  nothing  new  ;  perhaps  not,  but  the 
adoption  of  the  new  policy  was  due  to  the  influence 
he  wielded. 

Two  years  after  he  came  to  the  throne,  in  1890, 
the  very  year  in  which  he  dismissed  Bismarck,  he 
coined  the  now  famous  expression,  "  our  future  is 
on  the  sea." 

He  it  was  who  inaugurated  the  policy  of  "  Welt- 
politik,"  from  which,  however  capricious  and  in- 
coherent some  of  his  proceedings  may  have  appeared, 
he  has  never  departed. 

Without  harking  back  to  all  the  details  of  this 
piece  of  history,  let  us  try  to  reduce  it  to  its  main 
issue,  namely,  that  to  the  Germany  of  William  I 
and  Bismarck,  at  last  united  through  blood  and  iron, 
and  occupied  in  developing  her  own  resources, 
should  succeed  another  Germany  of  broader  acres, 
but  above  all  richer,  more  powerful,  more  glorious  ; 
that  was  the  dream  which  is  betrayed  in  all  his  words 
and  acts. 

They  had  been  the  heroic  pioneers.  Providence 
had  decreed  that  he  should  be  the  genius  of  her  up- 
building. Everything  indicates  how  much  the  gift 
of  imagination  possesses  him.  He  is  a  megalo- 
maniac, who  hankers  after  theatrical  effects  and 
delights  in  symbolism. 

What  a  superlative  achievement  it  would  be  to 
crown  the  work  of  his  predecessors  by  giving  all  of 


92      THE  RULING  CASTE  IN  GERMANY 

himself  to  the  creation  of  one  vast,  all-embracing 
Germany  which  should  make  the  whole  world 
radiant  through  the  agency  of  German  science, 
German  art  and  German  genius  for  organisation  ! 

To  lead  Germany  forward,  himself  at  the  head  of 
the  nations,  amidst  ever-increasing  material  and 
moral  prosperity  ;  would  that  not  indeed  bring 
assurances  of  happiness  to  mankind,  provided  only 
that  mankind  recognised  how  happy  it  was  ? 

This  dream  of  his  was  not  based  upon  the  idea  of 
armed  strength.  From  the  time  of  the  Schnaebele 
affair  in  1887,  which  was  before  he  came  to  the 
throne,  till  the  Tangier  crisis  in  1905,  he  left  France 
in  peace,  even,  on  several  occasions  made  friendly 
overtures  to  her.  He  kept  on  friendly  terms  with 
England  until  the  Transvaal  war,  and  even  for 
several  years  more.  Certainly  he  aimed  at  conquest, 
but  in  the  guise  of  peaceful  penetration. 

He  often  let  fall  the  suggestion  that  the  English 
fleet  and  the  German  army  working  together  could 
ensure  peace  in  Europe. 

It  was  economic  dominion  at  which  he  aimed,  and 
the  prosperity  of  England  served  as  an  example  of 
it.  He  proceeded  to  surround  himself  with  bankers 
and  manufacturers,  and  to  dabble  in  business. 

The  great  design  of  his  reign  should  be  to  develop 
the  riches  of  the  German  soil,  to  turn  to  account 
the  vigour  of  the  people  and  to  find  occupation  for 
all,  to  open  up  mines,  increase  the  number  of  fac- 
tories, perfect  methods  of  transport,  widen  the 


CONQUEST  BY  TRADE  AND  WAR       93 

scope  of  commerce  and  increase  the  field  for  financial 
operations,  not  alone  with  the  object  of  benefiting 
home  markets,  but  of  obtaining  control  of  those  of 
the  world.  The  influence  of  German  thought  and  a 
taste  for  things  German  could  not  fail  to  follow 
wherever  her  manufactures  had  penetrated,  and  so, 
secure  by  reason  of  Germany's  military  strength, 
reaping  untold  advantage  by  reason  of  her  wealth, 
the  world  entire  would  live  thereafter  in  the  con- 
tented enjoyment  of  German  peace.  He  has  been 
termed  the  Emperor  of  peace,  and  Emperor  of  peace 
it  was  his  aim  to  become. 

Standing  erect  in  his  grey  cloak,  on  his  head  his 
shining  helmet  surmounted  by  the  spreading  eagle, 
his  hand  on  the  hilt  of  his  sword,  he  would  gaze 
upon  his  own  people  thrilling  with  gratitude  and 
pride,  and  beyond  them,  to  all  mankind,  reaping 
rich  profits  from  its  daily  toil. 

At  his  command  the  arts  would  burst  like  flowers 
into  bloom.  The  diverse  mental  impulses  of  man- 
kind would  be  reduced  to  a  state  of  order  and  the 
hubbub  of  social  unrest  be  calmed  at  the  sound  of 
his  voice  ;  and  that  mystical  affinity  uniting  down 
the  ages  the  great  men  of  history,  from  Hammurabe, 
the  friend  of  Abraham,  to  his  grandfather,  William 
the  Great,  would  reach  its  climax  in  him  and  per- 
petuate his  good  work  ;  and  in  days  to  come,  yet 
another  marble  statue  would  be  erected  in  Berlin  in 
the  Sieges  AUee,  to  stand  there,  a  witness  to  his  own 
glory  and  the  fulfilment  of  his  high  Imperial  mission. 


94      THE  RULING  CASTE  IN  GERMANY 


3.  THE  MEANS  EMPLOYED 

The  first  thing  necessary  was  to  unite  the  nation 
in  one  huge  effort  to  put  an  end  to  class  strife  by 
dropping  Bismarck's  repressive  legislation,  and  by 
passing  acts  in  the  direction  of  trade  unionism  ; 
to  abandon  the  system  of  tariffs  which  closed  the 
German  markets,  in  order  to  encourage  foreign 
trade. 

That  was  Count  Caprivi's  task,  and  he  did  it.  It 
was  necessary  to  give  a  strong  impulse  to  manu- 
facture and  trade,  to  support  each  by  wise  financial 
organisation,  and  to  find  outlets  in  every  quarter  of 
the  world. 

All  that  was  done  and  with  success.  From  about 
1890  till  1900  or  1905  Germany  underwent  such  a 
transformation  and  expansion  as  partook  of  the 
nature  of  a  miracle. 

Professor  Ostwald  has  recently  explained  that  the 
Germans  have  discovered  a  new  "  element "  of 
civilisation — the  "  organisation  element."  We  shall 
see  in  what  this  consists.  The  results  have  staggered 
and  fascinated  most  visitors  to  the  cities  of  the 
Empire  during  the  last  fifteen  years.  A  few  figures 
will  suffice  to  give  the  reader  a  fair,  if  general  idea. 

The  extent  of  roadways  in  Germany  amounted  to 
30,000  kilometres  in  1857  and  in  1905  to  96,000  ; 
469  kilometres  of  railway  in  1840  had  grown  to 
54,164  in  1905  ;  representing  a  capital  expenditure 


CONQUEST  BY  TRADE  AND  WAR      95 

of  some  £560,000,000.  Further,  there  has  grown 
up  a  network  of  canals  and  canalised  rivers.  The 
mercantile  marine  amounted  to  500,000  tons  in  1850 
— in  1910  it  had  reached  the  position  of  second  in 
the  world,  with  a  tonnage  of  3,000,000.  Second 
only  to  the  English,  a  bad  second  it  is  true,  for  that 
of  England  amounted  in  1910  to  11,555,663  tons, 
consisting  of  21,090  vessels,  as  compared  with  4675 
German. 

The  mining  and  metallurgical,  the  chemical  and 
textile  trades,  and  the  youngest,  the  electrical,  have 
advanced  with  giant  strides  ;  the  latter,  for  example, 
which  has  grown  up  since  1895,  now  has  no  less  than 
£31,250,000  of  capital  invested  in  it. 

The  capital  invested  in  Electrical  Supply  amounts 
to  about  £125,000,000. 

The  output  of  the  mines  and  of  the  metallurgical 
trades  was,  round  about  1900,  represented  by 
£200,000,000  per  annum,  and  that  of  the  chemical 
industry  was  estimated  in  1905  at  £62,500,000^ 

The  iron  and  steel  industry  gives  occupation  to 
400,000  workmen,  without  counting  colliers  number- 
ing 700,000. 

What  is  most  striking,  and  sets  one  thinking,  and 
to  which  I  shall  return  in  due  course,  is  the  way  in 
which  production  has  increased  in  geometrical  pro- 
gression. For  instance,  the  output  of  coal,  which 

1  Instructive  figures  are  to  be  found  in  Lichtenberger's  book 
Modern  Germany  (London  :  Constable  and  Co.)  and  in  all  works 
based  upon  recent  statistics. 


96      THE  RULING  CASTE  IN  GERMANY 

was  72,000,000  tons  in  1886,  amounted  to  225,000,000 
in  1906.  Statistics  show  that  it  exceeds  250,000,000 
tons,  valued  at  £125,000,000  per  annum.  In  1912 
16,000  factories  were  at  work  in  the  textile  trades, 
employing  900,000  hands.  There  were  20,000 
engineering  workshops  employing  900,000  men. 
Then  there  are  the  trades  occupied  in  the  production 
of  drink  and  food-stuffs,  the  india-rubber  industry, 
leather  and  paper.  There  are  the  stone  and  earthen- 
ware trades  and  many  more.  There  are,  or  at  least 
were  in  the  German  Empire  before  the  war,  more 
than  300,000  factories  and  workshops  working  full 
time  and  giving  employment  to  6,500,000  hands. 

Commerce,  the  carrying  trade  and  the  building 
trade  employ  3,500,000.  One  simple  fact  will  show, 
to  some  degree,  the  scale  of  this  vast  output ;  the 
production  of  iron  by  the  whole  of  Switzerland, 
in  one  year,  say  6000  tons,  is  not  equal  to  one  day's 
output  of  the  German  furnaces.  In  1890  the  out- 
put was  4,600,000  tons— in  1910  close  on  15,000,000 
— equal  to  at  least  41,000  tons  per  day. 

The  Germans  have,  of  deliberate  purpose,  set 
themselves  systematically  and  hugely  to  exceed  the 
requirements  of  their  home  market.  They  have 
set  themselves  to  flood  the  markets  of  the  world, 
and  have  done  it  with  their  eyes  open. 

The  years  from  1890  to  1900  constituted  a  period 
marked  by  such  economic  conquests  as  have  never 
before  been  known,  in  which  the  skill  of  their 
engineers,  their  chemists,  their  craftsmen  of  every 

\ 


CONQUEST  BY  TRADE  AND  WAR       97 

kind  has  been  of  no  small  account.  Hundreds  of 
them  are  employed  in  all  the  big  works — their 
energies  directed  to  the  discovery  of  new  applications 
of  science  to  practice,  the  perfecting  of  machinery 
and  processes  of  manufacture  with  a  view  to  in- 
creasing output,  the  discovery  of  fresh  uses  for  by- 
products, and  means  of  developing  those  products 
which  would  otherwise  be  wasted. 

They  have  found  means  to  collect  the  iron  dust 
which  escapes  in  the  gas  given  off  by  the  blast 
furnaces,  to  mix  it  with  cellulose,  and  make  briquettes 
which  they  in  turn  make  use  of  to  feed  their  hungry 
furnaces. 

Hundreds  are  employed  where  food-stuffs  are 
made,  in  the  textile  industry — indeed  in  all  their 
industries.  Moreover,  neither  time  spent  nor  money 
expended  on  experiment  weighs  with  the  Germans 
when  it  is  a  question  of  establishing  some  new  process 
which  is  likely  to  make  them  masters  of  the  foreign 
market,  and  to  recoup  them  ultimately  for  their  expen- 
diture. They  turn  machinery  to  wonderful  purposes. 
By  means  of  stamping  plant,  by  making  large  numbers 
of  articles  to  template,  they  have  so  lowered  the  cost 
prices  as  to  crush,  for  the  time  being,  all  competition. 

I  intentionally  use  the  words,  for  the  time  being. 

To  manufacture  on  a  large  scale  the  outlay  must 
be  large.  Their  factories  are  huge,  and  they  do  not 
hesitate  to  keep  them  up  to  date,  to  scrap  plant 
and  buy  newer,  without  waiting  until  it  is  worn 
out. 


98      THE  RULING  CASTE  IN  GERMANY 

Now  that  can  only  go  hand  in  hand  with  the 
growth  of  a  very  large  volume  of  foreign  business, 
and,  as  a  matter  of  fact,  in  respect  to  trade  alone, 
German  "special"  imports1  amounted  in  1911  to 
£485,000,000  and  "  special "  exports  to  £405,000,000, 
making  a  trading  total  of  £890,000,000.  For  the 
same  year  the  total  reached  by  England  was 
£1,050,000,000. 

So  to  the  manufacturing  problem  is  added  a 
trading  one.  Where  is  this  huge  production  which 
the  workshops  and  factories  of  Germany  are  cease- 
lessly turning  out  to  be  dumped  down  ?  A  new-comer 
in  regard  to  foreign  business,  Germany,  having  ex- 
hausted her  home  markets,  was  faced  with  the 
essential  need  of  establishing  herself  abroad,  whether 
by  the  creation  of  colonial  outlets,  or  by  driving 
other  nations  out  of  the  markets  which  they  had 
created  ;  for  that  reason,  as  all  the  world  recognises, 
Germany  adopted  a  colonial  policy.  It  was  not  in 
order  to  find  an  outlet  for  her  surplus  population 
that  Germany  needed  colonies  at  any  price.  She 
has  not  enough  manhood  on  the  soil,  as  it  is,  and 
she  has  to  import  labour  every  year.  She  has  barely 
enough  hands  for  the  number  and  size  of  her  fac- 
tories. Emigration  figures  grow  less  every  year,  and 
are  now  negligible,  amounting  only  to  25,500  in  1910, 
of  whom  all  but  1800  went  to  the  United  States. 

1  "  Special  "  as  regards  imports  signifies  for  home  consump- 
tion ;  as  regards  exports  means  German  produce,  i.e.  not 
re-exported. 


CONQUEST  BY  TRADE  AND  WAR   99 

Moreover,  although  the  birth-rate  is  higher  than 
in  England  and  France,  it  is  decreasing  more  rapidly 
than  in  either  of  these  countries  ;  for  instance,  in 
Prussia  the  figure  was  in  1900  36-1  per  1000 ;  in  1910 
30-5.  In  Saxony  38-1  in  1900,  and  27-2  in  1910. 
In  Bavaria  36-8  in  1900,  and  31-4  in  1910.  Over  the 
same  decade  the  fall  was  from  28-2  to  25  per  1000 
in  the  United  Kingdom,  and  from  21-4  to  19-6  in 
France. 

This  fierce  desire  for  colonies  came  from  no  excess 
of  population  penned  within  frontiers  and  struggling 
for  breath.  What  German  prospectors  go  hunting 
about  the  world  for  are  mineral  deposits.  Germany 
wants  and  must  have  raw  materials,  also  she  needs 
corn,  seeing  that  she  has  become  to  such  an  extent 
an  industrial  nation  that  she  no  longer  grows  enough 
cereals  for  her  own  consumption.  In  1910-1911  she 
consumed  29,000,000  tons  after  deducting  seed  for 
sowing. 

Germany's  imports  of  cereals,  after  deducting 
those  which  she  exports,  amount  to  about  6,000,000 
tons,  or  say  16%  ;  that  is  to  say,  notwithstanding 
improved  methods  of  agriculture,  the  amount  of 
corn  of  every  description  imported  has  increased 
in  twenty-five  years  from  6%  to  16%  of  the  total 
consumption. 

Germany's  colonial  ventures  are  economic  in  aim, 
their  object  is  to  obtain  for  her  sources  of  corn  and 
mineral  production,  and  outlets  for  her  finished 
manufactures.  She  is  by  no  means  put  off  by  the 


100     THE  RULING  CASTE  IN  GERMANY 

fact  that  countries  on  which  she  has  cast  her  eyes 
are  already  peopled,  so  long  as  they  meet  her  re- 
quirements ;  if,  in  addition,  there  are  mineral 
deposits,  all  the  better.  Minerals  were  what  the 
brothers  Mannesmann  went  off  to  seek  in  Morocco, 
just  as  so  many  others  were  seeking  them  elsewhere; 
the  plan  being  to  build  up  interests,  real  or  fictitious, 
and  then  to  contrive  excuses  for  intervention  ;  yet 
their  colonial  enterprises  have  been  none  too 
successful. 

By  studying  their  methods  in  different  markets, 
by  observing  their  behaviour  and  noting  their  acts 
and  deeds,  one  may  trace  four  methods  employed 
by  them  to  attain  that  commercial  conquest  which 
has  been  exceedingly  profitable. 

I  lay  no  claim  to  any  estimate  of  its  moral  aspect ; 
I  have,  to  the  best  of  my  ability,  indicated  a  well- 
planned  scheme  of  trade  warfare,  which  I  main- 
tain has  turned  out  well ;  and  this  commercial 
warfare  having  been  a  success,  we  must  seek  the 
reason  why  Germany  has  entered  upon  war  of 
another  kind. 

The  first  method  is  that  of  infiltration  ;  in  other 
words,  personal  and  economic  penetration.  In 
regard  to  that,  I  will  now,  at  a  time  when  pub- 
lic feeling  is  so  much  aroused,  say  nothing,  and 
confine  myself  to  citing  a  well-known  fact,  namely, 
that  the  Germans,  even  in  the  United  States,  do  not 
become  assimilated  with  the  population  as  they 
used,  or  perhaps  as  we  only  fancied  they  used  to. 


CONQUEST  BY  TRADE  AND  WAR     101 

To-day  they  hang  together,  and  form  a  solid  party 
of  their  own.  Perhaps  it  is  not  surprising,  for  we 
live  in  a  time  of  perfervid  nationalism.  But  the 
German  thrusts  himself  in  everywhere.  Holding 
positions  of  all  kinds,  from  humble  waiter  in  a 
restaurant  to  posts  of  the  most  confidential  nature 
in  factories,  in  business  houses,  as  newspaper  editors, 
Germans  seldom,  if  ever,  lose  sight  of  the  material 
and  political  interests  of  their  own  country.  I  do  not 
mean  that  they  all  act  as  spies,  but  that  they  never 
lose  an  opportunity  of  spreading  German  propaganda. 

Before  the  war  Belgium  was  largely  controlled  by 
them.  In  some  of  the  states  of  South  America, 
where  they  form  a  strong  and  compact  body,  the 
Governments  have  been  seriously  preoccupied  as  to 
how  to  deal  with  them  ;  whether  to  oblige  them  to  go 
home  again,  or  to  force  them  into  the  undeveloped 
interior  of  the  continent,  where  they  would  of 
necessity  be  less  cohesive. 

Switzerland  is  a  country  in  which  they  carry  on 
their  conquest  by  infiltration. 

Very  significant  facts  point  to  their  having,  to  no 
small  extent,  retarded  the  awaking  of  Swiss  opinion 
and  the  expression  of  Swiss  feelings  of  late  in  Switzer- 
land itself  ;  there  are  no  less  than  40,000  Germans 
settled  in  the  Canton  of  Zurich,  not  to  speak  of 
those  in  Bale,  Berne  and  elsewhere. 

There  have  been  two  chief  methods  with  them,  of 
economic  penetration  ;  through  the  agency  of  repre- 
sentatives of  industrial  and  commercial  firms,  and 


102    THE  RULING  CASTE  IN  GERMANY 

by  purchase,  wholly  or  in  part,  of  interests  in  busi- 
nesses or  the  establishment  of  new  and  entirely 
German  firms.  A  pretty  instance,  which  I  have  on 
the  best  authority,  shows  with  what  resource  and 
ingenuity  the  agent  of  a  firm  will  set  about  securing 
a  contract.  It  was  a  question  of  the  electrification 
of  one^of  the  Swiss  mountain  railroads. 

The  quotations  received  from  the  Swiss  contractor 
and  the  German  were  for  all  practical  purposes  the 
same.  The  German  house  thereupon  offered  to  take 
up  800,000  francs'  worth  of  stock  in  part  payment, 
on  condition  that  it  should  be  given  the  contract. 
This  was  readily  agreed  to,  whereupon  the  Germans 
proceeded  to  sell  the  stock  on  the  Lausanne  and 
Geneva  exchanges,  so  that  the  astute  people  of 
Vaud  and  the  ingenuous  men  of  Geneva  paid  up 
their  savings  to  secure  the  contract  to  a  foreign 
concern  instead  of  to  one  of  their  own  firms. 

A  German  house,  established  abroad,  is  a  means 
of  outlet  for  goods  made  in  Germany  as  well  as 
those  which  itself  manufactures,  whether  finished 
articles  or  not. 

Part  holdings  in  business  houses  have  the  same 
result.  Care  is  taken  to  have  German  representatives 
on  the  directorate  ;  perhaps  only  one,  but  he  is  a 
holder  of  a  majority  of  the  shares.1 

1  I  am  only  speaking  here  of  trade  and  manufacture.  Yet 
the  papers  quite  recently  announced  the  retirement  of  a  director 
of  one  of  our  largest  Swiss  financial  houses.  He  was  the  only 
German,  but,  they  added,  the  most  influential  member  of  the 
board.  This  naive  statement  is  not  devoid  of  interest. 


These  houses  are  also  of  the  nature  of  information 
bureaux.  It  was  thus  that  Germany  came  to  be 
France's  competitor  in  the  matter  of  women's 
fashions,  and  "  articles  de  Paris." 

The  Americans,  for  example,  come  over  to  place 
their  orders  in  the  month  of  January.  In  the  course 
of  their  visit  to  Europe,  they  find  themselves  in  the 
office  of  some  German  commission  agency,  where 
they  are  urged  to  go  and  see  some  of  the  dressmakers 
in  Germany  ;  they  are  even  personally  conducted. 
There  they  see  charming  models  at  a  moderate 
price.  What  is  their  surprise  on  arriving  in  Paris  to 
find  the  same  models  !  "  But  that  is  not  new,"  they 
say.  "  I  have  just  seen  the  selfsame  thing,  and  much 
cheaper  in  Germany  !  "  And  the  order  is  placed 
beyond  the  Rhine. 

Now,  how  ia  the  thing  done  ? 

The  commission  agent  in  Paris,  no  matter  what  it 
may  cost  him,  gets  early  examples  of  the  fashions 
which  are  going  to  be  put  on  the  market,  and  sends 
them  to  Germany,  where  they  are  immediately 
turned  out  in  quantities,  in  standard  sizes,  made 
with  less  care,  and,  as  ill-disposed  critics  are  apt  to 
say,  with  less  taste  than  in  Paris,  but  cheaper,  and 
that  is  aU  that  is  required. 

Since  the  outbreak  of  war  the  French  Government 
has  caused  all  German  or  Austrian  business  houses 
in  France  to  be  closed. 

The  list  of  houses  affected,  according  to  the  police 
reports  up  to  January  5th,  1915,  numbers  4001, 


104    THE  RULING  CASTE  IN  GERMANY 

representing  commercial,  industrial  and  agricultural 
concerns,  of  which  1142  are  situate  in  Paris  and  the 
department  of  the  Seine  alone.1 

On  the  outbreak  of  hostilities,  and  with  a  view  to 
restoring  confidence,  the  Frankfurter  Zeitung  printed 
a  list  of  German  newspapers  which  are  published 
outside  Europe,  and  in  particular  in  Africa  and  Asia, 
numbering  one  hundred  and  sixty-eight.  To  these 
must  be  added  the  printed  news  sheets,  issued 
privately  by  the  trading  agencies. 

War  is  war,  but  make  no  mistake  that  it  is  war  ; 
in  other  words,  a  co-ordination  of  operations  planned 
with  method  and  foresight  and  directed  with  set 
purpose  to  bring  about  ruin  to  the  adversary. 

A  consideration  of  the  second  steps  in  the  scheme 
of  commercial  conquest  proves  it  beyond  dispute. 

The  second  step  is  dumping.2 

Dumping  consists  in  selling  at  breakdown  price  in 
order  to  defeat  competition  and  seize  the  market ;  for 
instance,  the  German  ironmasters  sell  their  girders  and 
channel  iron  for  130  marks  per  ton  in  Germany,  for 
120  to  125  in  Switzerland ;  in  England,  South  America 

1  For  a  typical  instance  of  peaceful  penetration  in  Belgium 
see  the  first  few  pages  of  the  striking  book  by  M.  Waxweiler, 
La  Belgique  neutre  et  loyale.  Lausanne  Payot,  1915.  For  the 
eame  relating  to  Italy  see  Preziozi,  La  Qermania  a  la  conquista 
delV  Italia,  Florence,  1915.  Preziozi  is  accused  of  exaggeration 
— but  even  allowing  for  that,  there  remain  very  significant 
statements. 

*  It  is  necessary  to  distinguish  between  dumping  or  suddenly 
throwing — forcing — on  the  market,  which  is  a  new  trade  feature, 
and  the  system  of  varying  prices,  which  is  not. 


CONQUEST  BY  TRADE  AND  WAR     105 

and  the  East  for  103  to  1 10  marks ;  in  Italy  they  throw 
it  away  at  75  marks  and  make  a  loss  of  from  10  to  20 
marks  per  ton,  for  the  cost  price  may  be  reckoned  at 
85  to  95  marks  per  ton.  That  is  dumping.  The  rival 
manufacturer  is  ruined  outright,  unless  he  comes  to 
a  working  agreement  and  accepts  all  conditions. 

Face  to  face  with  a  man  of  overwhelming  resources, 
with,  for  instance,  a  Solvay,  King  of  the  Soda 
market,  one  must  endeavour  to  come  to  terms,  and, 
for  the  most  part,  one  succeeds  ;  he  continues  to  do 
the  manufacture  and  shares  the  markets  with  those 
who  cannot  successfully  compete  against  him.  But 
that  is  only  the  case  with  the  strong  houses,  the 
others  are  driven  out  of  business  by  means  of 
dumping.  Whatever  happens,  he  remains  dictator 
of  the  market  price. 

Dumping  is  not  just  an  incident  of  trade — an 
exceptional  occurrence.  It  is  a  weapon  used  in 
respect  to  all  countries  when  commercial  conquest 
is  intended  ;  it  applies  to  the  iron  trade,  chemical 
trade,  electrical,  and,  indeed,  to  trade  of  all  kinds. 

In  Paris,  last  winter,  it  was  found  necessary  to 
allow  a  certain  German  firm  to  start  work  again,  else 
it  would  have  been  impossible  to  obtain  the  electric 
apparatus  necessary  for  radio-photography  in  the 
hospitals — it  had  control  of  the  market.  The  only 
French  manufacturer  who  could  supply  it  was  with 
the  army. 

The  Germans  had  established  several  factories  for 
turning  out  formic  acid.  This  acid  seems  destined  to 


take  the  place  of  acetic  acid,  which  is  much  used  in 
the  chemical  trades.  Three  years  ago  a  Frenchman 
proceeded  to  set  up  a  works  to  make  formic  acid. 
Immediately  the  price  fell  from  225  francs  to  80 
francs  per  100  kilogrammes,  and  the  Frenchman  was 
driven  out  of  the  market.  Yet  of  the  three  or  four 
German  manufacturers  two  were  forced  to  close 
down,  which  shows  that  they  were  selling  at  a  loss. 

Consider  the  case  of  Italy,  for  it  is  there  that  the 
method  is  most  in  evidence.  Why  ?  Because  the 
Italians  in  the  North  are  building  up  an  iron  in- 
dustry. Their  smelters  aim  at  freedom  of  trade.1 
The  competition  which  they  have  to  face  is  a  real 
drama — indeed,  at  times  a  veritable  tragedy. 

It  would  take  too  long  to  narrate  here  the  most 
notable  episodes  in  the  conflict,  and  to  describe  the 
fluctuations  that  have  taken  place. 

The  Germans  sell  bar  iron  at  130  marks  per  ton 
in  Germany  and  95  marks  in  Italy  ;  many  other 
manufactured  articles, such  as  iron  wire,  steel  springs, 
cold  rolled  iron  and  sheets,  etc.,  are  sold  in  Italy  at 
a  price  15  or  20  francs  below  the  market  price  in 
Germany. 

Austrian  makers  of  sheet  iron  sell  at  a  sacrifice  of 
7,  10  or  even  12  francs  per  quintal. 

In  the  case  of  steel  rails  the  price  has  been  lowered 
to  40  francs  below  that  at  which  the  Germans  have 
kept  it  in  other  countries. 

1  See  R.  Rldolfi,  La  siderurgia  Italiana  e  la  protezione  doganale, 
in  the  revue  Metallurgia  Italiana,  1914. 


CONQUEST  BY  TRADE  AND  WAR     107 

Competition  must  be  crushed  and  kept  down. 

If  Switzerland  enjoys  a  favourable  position  as 
regards  the  price  at  which  she  can  buy  iron  from 
Germany,  it  is  because  Switzerland  is  the  gateway 
to  Italy,  and  Germany  keeps  the  gate  closed  against 
Italy. 

In  spite  of  all,  the  Italian  ironmasters  are  deter- 
mined to  exist  and  do  exist,  but  what  spirit,  what 
tenacity  is  theirs  ;  what  a  deadly  struggle  they  are 
engaged  in  all  the  while.1 

The  Central-Verbund  of  Dusseldorf  controls  the 
iron  market  of  Germany,  Austria,  Switzerland, 
France  and  Belgium.  Italy  and  England,  as  might 
be  expected,  have  escaped  its  toils. 

Consider  what  it  means  to  control  the  iron  market 
and  to  be  the  arbiter  of  prices  !  It  means  control  to 
a  large  extent  of  all  engineering  construction,  control 
of  the  output  of  a  vast  number  of  manufactured 

1  It  is  pointed  out  to  me  that  dumping  is  in  vogue  to  some 
extent  at  least  all  over  the  world.  That  is  true,  but,  in  order, 
at  times  of  crisis,  to  find  a  market,  at  whatever  loss,  so  as  to 
keep  one's  factory  at  work,  and  one's  workmen  on  the  pay  sheet. 
Dumping  of  that  nature  is  intermittent  and  depends  upon  cir- 
cumstances :  it  comes  to  an  end  as  the  market  rights  itself, 
and  consequently  is  not  practised  in  order  to  bring  ruin  to  com 
petitors.  It  is  one  thing  to  dump  for  the  purpose  of  clearing 
one's  own  excessive  stock,  and  quite  another  to  do  it  systematic- 
ally, with  the  object  of  killing  out  competitors  in  other  countries 
and  seizing  their  markets.  The  German  practice  is  that  of  over- 
production with  a  view  to  dumping.  Liefmann  tries  to  justify 
the  German  practice  by  pretending  to  believe  that  German 
firms,  like  others  all  over  the  world,  produce  more  than  they  can 
at  times  dispose  of  and  have  to  unload  at  a  sacrifice.  The  dis- 
tinction between  the  two  forms  of  dumping  is  an  essential  one. 


108    THE  RULING  CASTE  IN  GERMANY 

articles,  of  machinery  of  all  kinds,  of  shipping  and 
railways  and  many  other  industries. 

I  will  not  press  the  importance  of  the  two  other 
methods,  though  their  importance  should  not  be 
under-estimated.  One  is  the  system  of  long  credits, 
the  other  the  assistance  rendered  by  the  Govern- 
ment. 

The  offer  of  long  credit  has  been  one  of  the  most 
insidious  means  used  to  allure  the  consumer.  Six 
months'  credit,  twelve  months',  even  eighteen 
months'  and  more.  In  trading  with  Russia,  in  many 
cases  there  has  been  no  fixed  limit — merely  payment 
by  cheque  from  time  to  time,  the  account  running 
on.  As  orders  increase  on  the  one  hand,  so  payments 
are  more  frequent,  that  is  all. 

Compare  this  with  the  system  in  vogue  in  France, 
which  is  one  of  three  months'  credit,  certainly  never 
longer  than  120  days.  The  Brazilian,  Argentine  and 
Chilian  markets  have  been  won  by  giving  long  credit. 
It  secured  the  commercial  penetration  of  Mexico. 

How  many  hundred  millions  of  marks  have  been 
locked  up  in  this  way  ? 

The  ramifications  of  the  fourth  method  are  even 
more  difficult  to  follow.  State  intervention  takes 
many  forms,  of  which  that  of  political  influence  is 
the  most  obvious. 

In  Bismarck's  words,  Die  Flaggefolgt  dem  Handel. 
Germany  has  largely  reversed  this  and  made  commerce 
follow  the  flag.  And  the  flag  has  been  carried  here 
and  there  over  the  world  to  good  purpose. 


CONQUEST  BY  TRADE  AND  WAR     109 

It  is  superfluous  to  recall  the  German  Emperor's 
journey  to  Jerusalem  or  Prince  Henry's  more  recent 
mission  to  South  America,  and  the  skilful  manner  in 
which  Germany  has  seized  every  opportunity  of 
asserting  her  prestige. 

Prestige  is  a  powerful  factor  for  success.  It  is  the 
weapon  used  by  all  diplomatists  and  consuls  to  achieve 
their  countrymen's  aims,  and  it  is  in  this  respect 
that  the  Germans  are  well  favoured ;  but  until  recent 
years  no  sovereign  has  himself  entered  the  lists  of 
commerce,  and  made  use  of  his  personal  influence  in 
order  to  advance  the  trade  interests  of  his  subjects. 

Orders  for  manufactured  goods,  financial  loans, 
mining  concessions,  opportunities  for  the  develop- 
ment of  new  territories  and  for  railway  construction 
have  fallen  like  some  new  kind  of  Imperial  manna  to 
the  Germans. 

The  state,  moreover,  supports  trade  by  joining  in 
it ;  and  by  reason  of  owning  mines  and  railways  is 
one  of  the  largest  commercial  concerns  in  the  country. 
Its  chief  aim  has  been  to  encourage  export  trade. 
Prussia  owns  collieries,  and  it  is  the  complaint  of  the 
members  of  the  federation  of  German  manufacturers 
that  the  Government  uses  all  its  influence  to  advance 
the  interests  of  the  Essen  Coal  Syndicate,  with  which 
it  has  a  working  agreement. 

The  board  of  the  "  Bund  der  Industriellen  "  has 
strongly  condemned  a  very  remarkable  policy  of 
state  railway  rates. 


110    THE  RULING  CASTE  IN  GERMANY 

"  For  a  double  waggon  of  coal  the  freight  charge 
is  only  37  marks  from  Duisbourg  to  Emden,  a  sea- 
port, the  distance  being  260  kilometres,  under  the 
special  rates  affecting  the  export  of  coal.  Over  the 
same  distance,  a  double  waggon  of  German  coal 
for  home  consumption  pays  64  marks  for  freight, 
and  English  or  Bohemian  coal  for  home  consump- 
tion as  high  as  69  marks."1 

More  to  the  point  still : — 

"  The  freight  of  a  double  waggon  of  German 
coal  from  Duisbourg  to  Hamburg,  a  distance  of 
367  kilometres,  costs  57  marks,  whilst,  in  the 
reverse  direction,  from  the  seaboard  to  the  in- 
dustrial centres  in  the  interior,  the  freight  charge 
is  86  marks  in  the  case  of  German  coal,  and  as 
high  as  93  in  the  case  of  foreign  coal." 

What  the  industrial  league  demanded  was  that 
these  export  rates  should  at  least  not  be  reduced 
still  further,  as  the  Prussian  minister  of  trade  had 
announced  in  the  Reichstag  on  March  4th,  1912, 
that  they  would  be. 

What  is  that  but  dumping  and  state  encourage- 
ment of  dumping  by  means  of  preferential  freight 
rates  ?  Here  we  have  the  state  itself  going  to  the 
conquest  of  foreign  markets — and  if  we  can  see  so 
much,  how  much  more  must  there  not  be  that  we 
do  not  see. 

1  Berliner  Tageblatt,  April  3,  1912  (Handelzeitung  ;  abend)  : 
Der  Bund  der  Industrietten  und  das  Kohlen-syndicat. 


CONQUEST  BY  TRA3E  AND  WAR     111 

A  word  as  to  the  "  Einfahrscheine  "  or  bounties  on 
imports,  which  are  in  fact  bounties  on  exports.  How 
can  Germany,  which  does  not  harvest  enough  corn 
for  the  needs  of  her  own  people,  afford  to  sell  to 
Denmark  and  even  to  Russia,  where  the  price  is 
lower  ? 

The  big  farmer,  who  does  not  breed  beasts  for  the 
markets,  and  who  sells  his  produce,  would  get  17*7 
marks  in  Germany  for  a  ton  (100  kilos)  of  rye.  He 
pays  the  railway  charges1  and  sells  in  Denmark  for 
14- 5  marks  per  ton  what  has  cost  him  18' 75  to  pro- 
duce. That  looks  like  selling  at  a  loss,  but  it  is  not 
so  in  fact,  for  the  state  gives  him  a  bonus  on  imports 
amounting  to  5  marks  per  ton,  and  with  this  bonus 
he  pays  the  import  duty  on  certain  articles,  such  as 
cereals,  coffee  or  petroleum,  of  which  the  state  frames 
the  schedule  ;  or  else  he  sells  his  bonus  on  the  Ham- 
burg bourse.  In  1911  the  sale  of  bonuses  on  imports 
reached  a  value  of  123  millions  of  marks. 

The  cattle-breeder  and  small  countryman  com- 
plained, but  the  big  landlords,  members  of  the 
Agricultural  League,  the  feudal  and  conservative 
agrarian  class  found  the  system  too  profitable  to 
allow  it  to  be  altered. 

Penetration  by  establishing  a  business  man  here 
and  there,  by  buying  controlling  interests  in  foreign 
companies,  or  by  setting  up  German  factories  abroad 

1  There  is  also  a  reduced  scale  of  freight  charges  for  cereals. 
Cf.  Berliner  Tageblatt,  December  7th,  1911,  in  an  article  by 
Dr.  Struve,  a  member  of  the  Reichstag. 


^  THE  RULING  CASTE  IN  GERMANY 

— Government  support  everywhere,  and  exerted  in 
every  sort  of  way — dumping  without  mercy — tariffs 
and  bonuses  do  not  represent  all  the  activities  of  the 
Government  supported  Germans,  but  these  are  the 
chief  and  the  least  obscure. 

Still,  industry  and  trade  cannot  exist  of  them- 
selves, and  these  factories  built  on  all  sides,  these 
vast  trading  concerns,  this  incessant  perfectioning 
and  renewing  of  machinery,  the  creation  of  a  mer- 
cantile marine,  the  winning  of  foreign  markets,  the 
giving  of  long  credits,  necessitate  the  expenditure 
of  vast  sums,  require  huge  capital.  Where  does  the 
money  come  from  ?  The  industrial  and  commercial 
system  in  Germany  is  erected  upon  a  wonderful 
system  of  finance.  The  Tower  of  Babel  was  also  a 
remarkable  erection. 


4.  GERMANY'S  FINANCIAL  SYSTEM 

The  heart,  the  motive  force  of  business  life  in 
Germany  is  the  bank,  and  the  functions  of  a  bank  in 
Germany  are  quite  different  from  those  in  France. 

In  both  countries  capital  has  tended  to  become 
centralised,  and  although  the  two  countries  repre- 
sent roughly  the  same  area,  in  Germany  nine  great 
banks,  and  in  France  five,  control  the  money 
market. 

Not  ten  years  ago  both  these  huge  financial  groups 
were  doing  approximately  the  same  amount  of  busi- 


CONQUEST  BY  TRADE  AND  WAR     113 

ness,  namely,  about  100,000,000  of  francs,  only 
French  banking  consisted  mainly  of  discount 
business.  The  French  banks  held  commercial  paper 
valued  at  500,000,000  francs  more  than  the  German. 
The  German  banks  held  1,200,000,000  more  than  the 
French,  but  in  the  form  of  credits,  loans,  overdrafts 
and  the  like.  In  other  words,  the  German  banks 
have  used  the  country's  savings  to  finance  industrial 
ventures  and  high  dividends  have  been  the  bait  to 
attract  foreign  capital. 

Between  the  years  1885  and  1900  more  than 
£1,200,000,000  was  put  on  the  market.  At  the  same 
time  a  curious  development  took  place.  The  banker, 
instead  of  confining  himself  to  the  business  of  lending 
money,  followed  his  capital — or  rather  that  of  the 
public — into  trade,  and  himself  controlled  its  use  by 
becoming  financial  adviser  to  the  companies  in  which 
it  was  invested.  Various  circumstances  brought 
this  about,  and  foremost  his  own  interest  in  doing 
so,  though  this  was  clearly  the  least  important  of 
them. 

Such  positions  are  not  unpaid.  The  financial 
adviser  to  a  big  concern  may  easily  net  from  two  to 
twenty  thousand  marks  per  annum  in  fees. 

Reference  to  the  Dictionary  of  Directors  and 
Financial  Advisers  for  1912  will  discover  sixteen 
financial  magnates  sharing  between  them  437  such 
positions  ;  in  one  case  one  man  held  as  many  as 
forty-four  ;  the  least  fortunate,  alas  for  him  !  only 
fifteen.  One  seems  to  see  the  financier  watching  the 
H 


114    THE  RULING  CASTE  IN  GERMANY 

luxuriant  growth  of  his  companies  and  enterprises 
of  all  kinds  with  an  aesthetic  joy,  and  advancing 
their  interests  in  all  directions  to  the  best  of  his 
abilities. 

Another  reason  was  the  advantage  to  the  under- 
takings themselves.  These  directors  deserved  their 
fees,  for  they  brought  wealth  to  a  whole  class — at  the 
expense  of  other  classes,  it  is  true — but  I  must  not 
anticipate. 

The  Germans  have  forged  two  weapons  in  the 
interests  of  trade,  the  like  of  which  have  never  before 
been  seen  :  organisation  and  credit. 

As  to  organisation,  the  financier,  holding  an 
interest  in  competing  firms,  set  himself  to  reconcile 
their  interests  by  means  of  working  agreements. 
Thence  the  system  of  "  Kartelle."  These  are 
understandings  between  firms  varying  as  to  the 
form  they  take  and  their  time  of  duration,  which 
to-day  control  the  productive  activities  of  every 
kind ;  for  instance,  mining,  chemical  manufacture, 
the  electrical  trades,  the  sugar  trade  and  the  metal 
market. 

In  1902  there  were  300  such,  and  of  late  years, 
their  number  has  increased  to  more  than  400. 
Competition  continues,  but  rival  firms  enter  into 
agreements  among  themselves  to  the  end  that  they 
may  keep  the  consumer  in  their  power,  settle  among 
themselves  what  discounts  shall  be  allowed  him, 
what  rebates,  what  rates  of  interest  shall  be  paid, 
what  commissions  given  and  so  forth.  Also,  under- 


CONQUEST  BY  TRADE  AND  WAR     115 

standings  with  a  view  to  sharing  among  them  big 
municipal  contracts,  instead  of  entering  into  com- 
petition for  them. 

Next,  they  organised  a  method  of  collecting  all 
orders  through  a  central  office,  and  from  it  dis- 
tributing them  among  the  manufacturers.  Output 
was  controlled,  stoppage  of  work,  competition  and 
fluctuation  in  prices  were  avoided. 

The  consumer  was  at  the  mercy  of  this  organisa- 
tion of  manufacturer,  trader  and  financier  ;  the  very 
contrary  to  what  happened  in  the  Middle  Ages  when 
commonwealths  came  into  being.  They  saw  division 
of  labour  and  specialisation  going  on,  but  without 
reaching  the  point  of  co-ordination  of  effort,  and  in 
the  end  the  merchant  and  the  retailers  imposing 
their  will  on  the  manufacturer,  and  making  him  their 
servant. 

Here  we  have  a  system  of  very  modern  growth. 
The  cartel  is  not  a  trust  in  the  American  sense,  it  is 
indeed  more  flexible — the  various  houses  taking  part 
do  not  become  one.  They  even,  to  all  appearance, 
are  rivals,  or  continue  at  least  to  compete  with  one 
another  in  those  fields  to  which  the  cartel  does  not 
apply.  Thus  they  forestall  any  protests  that  the 
public  might  make. 

The  great  electrical  firms  of  Siemens  and  Halske 
on  the  one  hand,  and  the  A.E.G.  (AUgemeine 
Elektrizitats  Gesellschaft)  on  the  other,  may 
appear  to  be  deadly  rivals  ;  that  is  for  the  benefit 
of  the  public. 


116    THE  RULING  CASTE  IN  GERMANY 

"  Has  so-called  controlled  competition  by 
chance  the  outward  appearance  of  competition 
in  order  not  to  alarm  the  public,  and  does  it  really 
consist  in  an  understanding  of  which  the  state 
and  the  consumer  need  know  nothing,  and  by 
which  prices  are  fixed  and  markets  are  shared  ?  "* 

The  fact  is  that  the  electrical  trade,  the  last  to 
arrive  on  the  scene,  is  one  of  the  most  centralised, 
perhaps  the  most  completely  organised.  And  what 
is  behind  it  ?  The  Deutsche  Bank,  a  very  "  Empire 
within  an  Empire." 

The  Plesiosaurus  and  the  Ichthyosaurus  have  so 
wisely  united  themselves  in  matrimony  as  to  place 
their  German  clients  at  their  mercy  and  enable  them 
to  undertake  the  conquest  of  the  world,  for  the 
German  electrical  trade  has  for  some  years  looked 
like  obtaining  a  veritable  monopoly  in  Europe  and 
beyond.  The  Swiss  know  something  of  it  !2 

Put  up  prices  all  round  when  one  controls  the 
market  and  as  a  consequence  make  living  more 
expensive.  Dump,  crush,  and  carry  on  a  merciless 
war  on  those  that  one  does  not  control ;  that  is  the 
system  in  all  its  terrible  simplicity. 

1  Berliner  Tageblatt,  April  5th,  1912  :   Elektrotrust. 

2  An  interesting  and   doleful  story  might   be    told   of   the 
economic  enslavement  of  Switzerland.     Economic  enslavement 
is  not  the  prelude  to  political — it  is  the  thing  itself,  or  a  sub- 
stitute for  it.     The  nation  which  imposes  the  one  need  not 
trouble  about  the  other.    That  is  the  "  organisation  factor  "  of 
which  Professor  Ostwald  spoke. 


CONQUEST  BY  TRADE  AND  WAR    117 

In  1900  the  cartel  among  the  manufacturers  of 
iron  girders  made  a  profit  of  1,200,000  marks  in 
Germany  and  lost  850,000  on  its  foreign  sales,  which 
is  a  very  significant  fact.1 

The  most  astounding,  the  most  ingenious,  the 
most  audacious  and  the  most  rash  is  the  organisation 
for  making  loans. 

One  does  not  find  big  businesses  in  Germany,  as 
one  does  in  France,  dispensing  with  outside  financial 
help,  and  making  their  capital  expenditure  out  of 
annual  profits. 

The  saying  that  "  capital  is  savings  "  applies, 
says  M.  Yves  Guyot,  to  the  capital  invested  in 
French  collieries.  In  other  words,  French  con- 
cerns have  grown  as  the  demand  for  their  pro- 
ducts has  increased  and  capital  accumulated. 
M.  Yves  Guyot  deals  with  the  subject  in  the 
chapter  headed  "  lie  Capital  et  1'Industrie 
metallurgique. " 

In  Germany  manufacture,  mining  markets  and 
trade  have  all  grown  up  suddenly  as  if  the  outcome 
of  some  creative  impulse  of  the  mind — some  philo- 
sophical system  of  thought,  instead  of  as  they  were 
needed  to  fill  requirements. 

All  that  calls  for  huge  loan  capital  with  which  to 
buy  raw  material,  to  build  up  foreign  markets,  to 
acquire  mines  and  collieries,  to  buy  up  competing 
businesses  and  set  up  new  factories.  The  policy  of 
Weltpolitik  dates  from  twenty-five  years  ago,  and 

1  Delaisi,  La  Force  AUemande,  Paris,  1905. 


118    THE  RULING  CASTE  IN  GERMANY 

in  that  period,  one  must  reckon  the  money  invested 
abroad  by  hundreds  of  millions. 

The  annual  income  from  this  capital  is  estimated 
at  £40,000,000  per  annum,  and  it  is  admitted  that  it 
is  this  income,  together  with  that  accruing  from 
her  ocean  freights,  which  makes  up  for  Germany's 
excess  of  imports  over  exports. 

So  she  has  had  constantly  to  appeal  for  funds, 
to  cast  about  in  all  directions  for  capital,  and  even 
then  it  has  not  been  sufficient.1 

Then  the  great  banks  substituted  paper  for 
accumulated  funds.  It  was  high  time,  for  this 
commercial  world  conquest,  like  the  conquests  of 
the  Roman  Empire,  could  not  be  checked  without 
serious  dangers.  The  larger  the  frontier,  the  more 
urgent  became  the  need  to  protect  the  extended 
front,  and  give  support  to  the  advance  posts. 

I  do  not  claim  that  the  big  concerns  show  no  large 
reserves  in  their  balance  sheets,  but  these  reserves 
consist  of  "  lock  up  "  securities  and  are  not  realisable. 
All  that  is  made  is  all  the  time  being  reinvested  in 
industrials,  in  the  same  way  in  which  what  is  saved 
from  the  exhaust  gases  of  the  blast  furnaces  is  being 
used  over  again. 

Owing  to  the  fact  that  the  banks  work  together, 
and  to  their  being  linked  up  with  the  industrial  and 

1  On  the  subject  of  the  success  and  the  failure  of  their  many 
state  loans  see  the  notable  study  from  the  pen  of  M.  Lucien 
Hubert,  La  Puissance  financiere  de  V Allemagne,  in  the  Revue 
Hebdomadaire,  Paris,  November  6th,  1910. 


CONQUEST  BY  TRADE  AND  WAR    119 

trading  companies,  they  hold  the  paper  of  the 
latter  in  common.  Their  mutual  understandings 
are  not  publicly  known.  The  seeming  rivalry  be- 
tween the  Deutsche  Bank  and  the  Diskonto-Gesell- 
schaft  on  the  petroleum  question  in  1913  meant 
nothing.  In  each  of  the  big  banks  there  is  an  inner 
sanctuary,  the  "  Consortialbureau,"  into  which 
only  the  few  great  chiefs  to  whom  the  inner 
secrets  are  known  (not  even  all  the  directors)  may 
enter. 

There  secret  financing  is  done,  combinations  of 
interests  are  developed,  and  gigantic  mutual  under- 
takings entered  upon. 

Each  guarantees  the  other's  paper,  and  all  is  well 
so  long  as  the  confidence  of  the  public  is  not  shaken, 
and  it  is  essential  that  this  confidence  should  be 
kept  up  by  prestige  :  prestige  of  the  state  and  of  the 
army,  the  prestige  which  comes  of  dividends,  the 
prestige  of  activity  and  increasing  output. 

How  have  the  many  crises  which  have  followed 
one  upon  the  other  during  the  last  fifteen  years  been 
surmounted  ?  By  just  this  solidarity  and  intricate 
commingling  of  interests  among  the  banks.  If  I 
may  so  put  it,  their  roots  do  not  grow  in  the  soil, 
they  just  adhere  to  it,  but  they  adhere  over  a  vast 
area  ;  linked  together  they  cover  the  whole  ground, 
and  when  a  landslide  threatens,  throw  in  their 
cumulative  weight  to  arrest  it. 

Take  an  example  of  this  circulation  of  paper.  In 
order  to  raise  a  war  loan,  the  Empire  set  up  a  lend- 


120    THE  RULING  CASTE  IN  GERMANY 

ing  bank  (Darlehnskasse)  which,  in  exchange  for 
securities  of  industrial  and  other  companies,  made 
advances  in  the  form  of  bonds  to  60%  of  their  value. 
The  loan  could  be  subscribed  for  with  these  bonds. 
That  was  all  very  well  as  an  extreme  measure  within 
the  state  itself,  but  how  about  foreign  payments  ? 
Economists  tell  us  of  Gresham's  law :  bad  money 
drives  out  good. 

The  Reichsbank  itself,  head  of  the  whole  banking 
system,  which  governs  it  by  discounting  the  paper 
of  all  the  other  banks,  includes  as  part  of  the  gold 
reserve,  Treasury  bonds,  and  since  August  7th,  1914, 
the  bonds  of  the  above-mentioned  Government 
lending  bank  (Darlehnskasse).1 

Thus  its  cover  in  gold  and  silver  is  watered  by  a 
varying  quantity  of  paper,  amounting  on  the  31st 
December,  1914,  to  875,000,000  marks,  and  on  the 
14th  of  January,  1915,  to  414,000,000,  which  is  the 
security  for  notes  in  circulation.  Let  us  examine 
more  closely,  and  we  shall  see  something  else. 

The  great  banks  have  drained  Germany  of  her 
savings,  have  ruined  or  absorbed  the  small  provincial 
banker. 

They  have  also  accumulated  as  much  foreign 
capital  as  possible — that  is  natural. 

They  have  made  issues  of  securities  which  exceed 

1  I  am  indebted  to  one  of  my  colleagues  of  the  Ecole  des 
Sciences  commerciales  de  1'Universite  de  Lausanne  for  this 
interesting  information.  See  also  Journal  des  Economistea, 
July  15th,  1914,  p.  70,  the  article  by  Schwarzwald,  translated 
by  M.  Raffalovitch. 


CONQUEST  BY  TRADE  AND  WAR    121 

greatly  the  money  awaiting  investment — that  is 
foolhardy. 

What  becomes  of  the  state  securities  or  the  stock 
held  in  industrial  companies  which  have  not  been 
taken  up  ?  Can  they  be  juggled  with  among  the 
"  Consortialbureaux  "  in  such  a  way  that  if  one  is 
overstocked  with  industrial  stock,  it  can  exchange 
its  surplus  for  state  securities,  and  vice  versa  ?  We 
have  not  been  told,  we  are  not  told  now,  and  we 
shall  not  be  told.  Nevertheless,  what  does  become 
of  this  paper  pending  the  time  when  it  can  be 
liquidated  ? 

Consider  the  figures  :  the  capital  invested  in 
trading  and  manufacturing  companies  annually 
amounted  from  1885  to  1889  to  an  average  of 
1,770,000,000  francs  ;  from  1890  to  1895  of 
1,880,000,000  ;  from  1896  to  1900  of  2,384,000,000, 
or  more  than  30  milliards  (£1,200,000,000)  in  sixteen 
years,  not  to  speak  of  the  repeated  loans  offered  for 
subscription  by  the  various  states  ! 

These  issues  are  mainly  taken  up  by  the  public, 
which  is  attracted  by  the  promise  of  big  dividends, 
and  go  to  increase  the  scope  and  productive  power 
of  the  issuing  companies  ;  in  other  words,  the  money 
is  lent  on  credit  to  the  traders  and  manufacturers. 

Well,  is  that  the  real  state  of  the  case  ?  In  part 
it  is,  and  in  part  not.  Just  as  more  securities  are 
issued  than  are  represented  by  the  money  subscribed, 
so  the  banks  give  more  credit  than  they  receive 
securities  for ;  and  this  is  a  systematic  practice. 


122    THE  RULING  CASTE  IN  GERMANY 

In  all  countries  it  happens  at  times  that  more  credit 
is  given  than  is  covered  by  securities  deposited,  but 
it  is  the  exception. 

These  unsecured  loans  are,  in  German  banks, 
distributed  over  several  ledgers.  A  bank  opens  an 
account  of,  say,  10,000  marks  with  a  customer,  but 
the  customer  is  permitted  to  draw  up  to,  say,  20,000. 
Look  at  the  accounts  rendered  by  any  of  the  branches 
of  some  great  bank  to  the  head  office,  and  you  will 
see  the  heading :  Blanco  und  gedeckter  Kredit, 
"  over-draft  and  current  account."  These  two  forms 
of  credit  are,  for  good  reasons,  treated  as  consolidated 
into  one. 

Then  you  will  find  "  Trassierungskredit "  and 
"  Saisonskredit."  What  does  that  mean  ?  It 
means  that  a  borrower  comes  to  the  bank.  The  bank 
does  not  give  him  cash,  but  instead,  allows  him  to 
draw  a  bill,  which  the  bank  accepts,  which  bill  is  to 
be  met  on  maturity.  The  borrower  then  gets  this 
bill  discounted  by  another  bank,  which  will  present 
it  for  payment  to  the  first  bank.  The  second  bank 
makes  payment  to  the  borrower  in  the  shape  of  a 
credit  balance  on  which  he  can  draw  by  cheque. 
That  is  "  Trassierungskredit,"  or  a  credit  given 
without  deposit  of  cash  or  security.1 


1  In  England  described  as  an  accommodation  bill  transaction. 
This  system  of  accommodation  bills  is  common,  I  am  told, 
more  or  less,  all  over  the  world,  mainly  between  men  on  the  verge 
of  financial  disaster,  but  is  it  anywhere  to  be  found  except  in 
Germany  as  representing  everyday  banking  business  ? 


CONQUEST  BY  TRADE  AND  WAR     123 

"  Saisonskredit  "  is  of  much  the  same  kind.  It 
is  a  loan  account  granted  to  merchants  for  the  pur- 
chase of  such  stock  as  is  only  saleable  at  certain 
definite  times  of  the  year,  such  as  articles  of  fashion, 
furs,  ladies'  hats  and  clothes. 

To  understand  how  these  loans  are  manipulated 
it  is  necessary  to  be  acquainted,  not  only  with  the 
balance  sheet  and  debit  and  credit  account  of  a 
bank,  but  with  its  ledgers,  showing  the  balance  to 
credit  of  each  borrower,  and  the  private  agreements 
under  which  each  is  doing  business  with  the  bank. 
But  I  can  give  one  illuminating  example.  The 
official  return  of  all  loans  made  by  a  single  country 
branch  of  one  of  the  largest  banks  in  Germany 
amounted  over  a  period  of  one  year  to  8,305,000 
marks,  of  which  6,693,000  marks  were  secured, 
1,612,000  unsecured,  or,  in  other  words,  there 
was  no  security  to  show  for  25%  of  the  loans 
made. 1 

Indeed,  it  is  not  even  paper  which  is  in  circulation, 
not  even  shares  in  over-capitalised  undertakings. 
It  is  nothing  other,  in  fact,  than  a  vast  number  of 
debts  that  are  in  circulation — an  amazing  spectacle 
indeed — wholesale  indebtedness,  vastly  inflated  and 
converted  into  currency. 

And  what  magic  wand  is  it  that  makes  this  state 
of  affairs  possible  ?  Again  it  is  prestige. 

The  Reichsbank,  which  issues  the  Government 

1  These  figures  may  hardly  seem  believable,  but  I  have  myself 
seen  its  statement  of  accounts. 


124    THE  RULING  CASTE  IN  GERMANY 

loans,  discounts  the  paper  of  the  other  banks,  and  by 
fixing  the  discount  rates  is  in  a  position  to  encourage 
or  to  check  operations. 

It  controls  the  money  market,  for  the  banks,  in 
spite  of  the  competition  existing  amongst  them, 
form  by  their  combinations  one  with  another,  by 
the  inextricable  intricacy  of  their  system  of  loans, 
a  giant  organism  which  feeds  upon  its  very  self. 1 

And  thus  Germany  got  rich.  In  two  years,  in 
Prussia,  the  taxes  imposed  on  incomes  above 
3000  marks  rose  from  6,775,000,000  marks  to 
7,841,000,000.  Savings-bank  deposits  reach  a  sum 
of  eight  thousand  million  marks,  or  more  than 
double  those  of  France.1 

So  people  get  rich  on  issues  of  capital  in  indus- 
trials which  exceed  the  amount  which  the  country 
can  absorb,  Government  loans  without  end  which 
the  market  can  with  difficulty  take  up,  capital 
locked  up  in  development  works,  in  plant  which 
must  constantly  be  renewed,  and  on  loans  without 

1  This  is  still  going  on  during  the  war.     I  have  already 
described  how  the  first  war  loan  was  raised.     The  second  was 
floated  as  follows  :   A  holder  of  first  war  loan  pays  two  hundred 
marks  and  has  eight  hundred  lent  him  on  the  security  of  his 
first,  so  that  he  may  take  up  a  thousand  of  the  second.    In  other 
words,  it  is  a  mere  exchange  of  paper ;  the  state  lends  its  creditors 
the  money  which  it  borrows  from  them. 

2  Maurice  Lair,  ^Imperialism  allemand,  2nd  edition,  Paris, 
1909.     Also  on  all  these  matters  it  is  well  to  refer  to  the  two 
important  books  by  G.  Blondel,  UEssor  industriel  et  commercial 
du  Peuple  Allemand,  3rd  edition,  Paris,  1900,  and  Lea  Embarraa 
de  VAllemagne,  Paris,  1912. 


CONQUEST  BY  TRADE  AND  WAR     125 

security  !  Well,  some  people  get  rich.  Which  are 
they  ?  and  what  do  the  rest  think  of  it  all  ?  On 
what  foundation  is  such  a  system  built  ?  Who  pays 
in  the  end  ? — Somebody  must  pay. 

Is  it  by  chance,  to  use  a  simile,  that  the  only  way 
to  caulk  one  leak  was  to  spring  another  ?  On  what 
did,  I  do  not  say  the  success,  but  the  perpetuation 
of  this  system,  depend  ?  Was  it  essential  to  look 
beyond  the  borders  for  a  nation  which  could  be 
taxed  and  made  to  suffer  in  the  interests  of  Germany, 
because  the  country  could  do  no  more  ?  Was  time 
short  ?  And  had  Weltpolitik,  the  policy  of  universal 
economic  conquest,  after  having  intoxicated  the 
Emperor,  his  ministers  and  his  people,  brought  them 
to  such  a  pass  that  war  was  the  lesser  of  two 
evils  ? 

Was  it  that  the  day  of  reckoning  of  the  cost  of 
peaceful  conquest  was  not  so  far  off  as  had  been 
planned,  and  was  the  necessity  for  meeting  it 
drawing  near,  if  not  indeed  at  hand  ?  Was  it  seen 
that  delay  would  be  fatal  ? 


5.  THE  OBSTACLES  IN  HER  PATH 

Let  us  consider  the  facts  which  I  have  stated 
together.  It  is  not  easy  to  sum  up  the  state  of 
affairs  of  a  great  nation,  but  one  may  consider  the 
problem  within  certain  circumscribed  limits,  and 


126    THE  RULING  CASTE  IN  GERMANY 

I  propose  to  confine  myself  to  seeking  the  answers 
to  three  questions  : — 

1.  What    are    the    main    characteristics    of    the 
economic  organisation  which  Germany  has  adopted  ? 

2.  What  was  it  which  led  her  to  adopt  the  policy 
which  she  has  adopted  ? 

3.  Has  she  been  able  to  comply  with  the  condi- 
tions which  have,  by  its  adoption,  become  necessary? 

Everyone  is  agreed  as  to  the  first.  The  economic 
organisation  of  Germany  is  a  policy  of  conquest. 
By  reason  of  this  policy  her  trade  and  manufacture 
are  closely  dependent  on  one  another,  and  both  are 
dependent  on  the  banks.  Of  late  years  there  has 
been  a  new  and  well-marked  tendency  towards 
industrial  combination.  In  the  first  place,  the  trade 
associations  and  combinations  of  various  kinds 
make  it  their  endeavour  to  control  all  the  output 
and  by-products  of  a  trade,  such,  for  instance,  as 
finished  iron.  In  the  second  place,  and  in  greater 
degree,  they  endeavour  to  be  independent  of  those 
who  supply  the  raw  material,  and  of  the  middle- 
men whose  business  it  is  to  sell  the  finished  articles. 
Thus,  for  instance,  the  steel  manufacturers  buy  up 
collieries,  colliery  proprietors  strive  to  get  foundries 
and  ironworks  established  alongside  their  pits.  It 
is  a  battle  of  mastodons,  but  a  battle  with  the  result 
that  industrial  combination  goes  on  without  mercy. 
Further,  the  manufacturers  have  become  so  power- 
ful that  they  can  dictate  their  own  terms  to  the 


CONQUEST  BY  TRADE  AND  WAR     127 

merchants ;  in  other  words,  they  also  control 
trade,  thanks  to  their  control  of  the  sale  of  their 
manufactures.  They  have  central  offices  which  fix 
the  price  at  which  the  brokers  shall  sell  iron,  the 
amount  they  may  put  on  the  market,  and  the 
markets  in  which  they  may  trade.  The  brokers 
are  bound  to  show  them  their  account  books  if 
required  to  do  so. 

A  merchant  in  Lausanne  may  not  sell  a  ton  of 
iron  to  a  purchaser  in  Evian,  Evian  not  being  in  his 
district ;  he  may  only  sell  such  quantity  as  is 
allotted  to  him  under  penalty  of  having  any  excess 
amount  awarded  to  his  competitor,  and  he  may  only 
sell  at  a  price  fixed  for  him.  Should  he  decline  to 
be  bound  hand  and  foot  to  the  Centralverbund  of 
Diisseldorf  his  fate  is  sealed  ;  no  more  goods  will 
be  delivered  to  him,  and  he  must  face  ruin.  Further, 
he  has  to  take  delivery  at  whatever  time  it  suits, 
not  him,  but  his  masters. 

At  the  same  time  that  he  aims  at  seizing  all  raw 
materials  and  controlling  trade,  the  manufacturer 
rounds  on  the  banks  on  whose  help  he  has  so  long 
depended,  and  with  whom  he  still  cannot  do  with- 
out, by  setting  up  his  own  financial  houses,  who 
issue  his  stock,  and  by  buying  up  bonds  and  shares, 
acquires  interests  in  other  industries.  In  this  way 
he  acquires  very  extensive  interests,  and  there 
accrues  a  common  purpose  among  the  various 
manufacturing  concerns  which  is  at  once  a  source 
of  strength  and  of  danger. 


128    THE  RULING  CASTE  IN  GERMANY 

Would  the  banks  be  willing  to  see  themselves  in 
the  end  deprived  of  one  at  least  of  their  activities, 
and  that  one  of  the  most  valuable  ?  Would  they 
be  content  to  be  limited  to  issuing  Government 
loans,  and  to  the  business  of  discounting  bills,  and 
of  lending  money  on  mortgages  ?  A  struggle 
between  the  great  banks  and  the  great  manufactur- 
ing industries  would  be  one  of  the  most  remarkable 
and  most  absorbing  in  all  modern  economic  history- 

The  organising  of  output  became  in  due  course 
international,  and  from  that  moment  it  was  not 
only  the  retailer  who  was  tied  hand  and  foot,  but 
the  consumer.  Take  as  an  example  the  Europaische 
Petroleum  Union  of  Bremen ;  a  joint  business 
formed  in  1906  of  the  British  Petroleum  Company 
and  the  German  Company  for  the  sale  of  petroleum, 
with  the  object  of  fighting  the  American  Standard 
Oil  Trust.  Each  of  the  allied  businesses  includes 
distributing  companies  and  financial  concerns  in 
Germany,  Austria,  Denmark,  Switzerland,  Belgium, 
Holland  and  England,  and  behind  all  stand  the 
Wiener  Bank  and  the  Deutsche  Bank ;  only, 
instead  of  entering  into  active  competition  with  the 
American  Trust,  a  working  agreement  was  come  to  : 
contracts  were  entered  into  with  the  distributing 
companies  of  the  Trust  in  Europe,  and  thus  arose 
the  Europaische  Petroleum  Union,  with  offices  in 
Bremen.  In  the  same  way  the  chief  electrical 
manufacturing  concerns  have  companies  which 
they  control  in  many  countries,  and  acquire  busi- 


CONQUEST  BY  TRADE  AND  WAR     129 

nesses  in  any  way  related  to  their  own,  such  as 
works  engaged  in  the  manufacture  of  machinery  t 
india-rubber,  cables,  iron  wire,  copper,  aluminium 
and  chemicals. 

So  we  see  the  system  spreading  over  the  whole 
world,  and  it  has  for  its  policy  conquest.  No  longer 
is  it  a  case  of  live  and  let  live.  Competition  must 
be  strangled,  or  got  rid  of  by  agreement.  What  I 
have  indicated  is  sufficient  to  show  that  ;  it  would 
be  still  clearer  had  I  space  to  go  into  the  question 
in  greater  detail.  For  example,  I  would  instance, 
among  other  methods,  that  of  the  "  Exklusivver- 
trag,"  or  exclusive  agreement,  under  which  buyers 
may  only  purchase  from  members  of  the  "  Kartel  "  ; 
producers  of  raw  materials  sell  only  to  members  of 
the  "  Kartel,"  or,  again,  an  agreement  to  sell  at  a 
higher  figure  to  all  who  are  not  members  of  the 
"  Kartel."  Further,  the  "  Kartels  "  fix  the  amount 
of  the  bonus  on  exports  (ausfuhrvergiitungen), 
which  is  to  hold  among  their  members,  which 
must  not  be  confounded  with  the  bonuses  on 
imported  goods  granted  by  the  state.1 

No  sooner  is  a  district  or  trade  won  than  economic 
slavery  is  organised,  and  the  consumer  and  retailer 
can  do  no  other  than  submit  to  it. 

In  the  case  of  iron,  the  Central verbund  of  Diissel- 
dorf  controls  the  sale  by  merchants  in  Germany, 
Austria,  Switzerland,  Belgium  and  France,  but  no 

1  Professor  Liefmann,  of  Fribourg,  gives  much  information 
in  regard  to  these  matters  in  his  book  on  Kartels  and  Trusts. 
I 


130    THE  RULING  CASTE  IN  GERMANY 

one  may  penetrate  into  the  secrets  of  its  ledgers, 
and  its  profits  can  only  be  approximately  estimated 
at  13%  or  14%. 

That  is  what  is  called  economic  organisation,  and 
it  is  the  task  to  which  Germany  has,  for  the  past 
twenty  years,  directed  all  her  national  and  indi- 
vidual efforts.  What  resistance  can  be  offered? 
The  consumer  is  helpless.  In  the  first  place  public 
opinion  has  not  been  awakened,  for  the  wheels  of 
the  great  machine  are  hidden  ;  the  public  is  only 
aware  of  local  trading  companies  with,  for  the  most 
part,  every  appearance  of  being  native  to  the 
country.  The  eyes  and  the  tentacles  of  the  octopus 
are  at  Bremen,  at  Diisseldorf  and  at  Berlin  ;  the 
tentacles,  armed  with  innumerable  suckers,  reach 
out  to  Asia  Minor,  by  way  of  Constantinople  and 
Salonica ;  to  Petrograd,  Paris  and  Barcelona ;  they 
threaten  London,  through  Rotterdam  and  Antwerp, 
stretch  across  Switzerland  into  Italy;  extend  over 
the  Atlantic  and  South  America,  embrace  Chili, 
spread  out  over  Brazil,  the  Argentine  and  Mexico, 
and  in  another  direction  to  the  Indian  Ocean  and 
the  China  seas,  and  fix  themselves  firmly  on  the  Far 
Eastern  strands. 

A  methodical,  bloodthirsty,  universal  warfare 
which  Germany  was  nevertheless  unable  to  conduct 
to  her  complete  satisfaction. 

If,  in  economic  warfare,  as  in  real  warfare,  one 
can  cast  one's  bounden  duties  and  all  scruples  to 
the  winds,  there  yet  exist  natural  obstacles  which 


CONQUEST  BY  TRADE  AND  WAR     131 

cannot  be  eluded.  The  nature  of  these  obstacles 
depends,  in  great  part,  on  the  tactics  adopted,  and 
that  is  why  I  have  described  the  means  employed 
by  Germany  to  master  the  trade  of  the  world. 

A  general  who  advances  too  far  from  his  base 
must  face  an  action  before  he  has  used  up  all  his 
munitions  and  provisions.  If  he  attacks  he  will 
endeavour  to  hustle  his  adversary  and  give  him  no 
time  to  call  up  reinforcements.  It  is  the  same  thing 
if  one  sets  out  to  conquer  the  world  in  the  manner 
I  have  described.  Certain  conditions  must  be  ful- 
filled. What  are  they  ? 

The  most  important,  one  would  imagine,  is  that 
of  time,  or  rather,  one  must  take  into  account  two 
— continuity  and  continuance.  The  first  implies 
the  need,  not  only  of  continuous,  but  constantly 
increasing  output.  The  second  the  need  to  dominate 
the  chief  markets  of  Europe,  and  even  beyond 
Europe  :  to  control  distribution  and  prices,  and 
to  reach  that  position  within  a  given  time. 

Let  us  consider  first  the  one,  then  the  other. 

Why  must  the  rate  of  production  be  constantly 
increased  ?  Because  from  the  start  it  has  been 
calculated  on  a  basis  far  in  excess  of  the  market's 
power  of  absorption — a  reversal  of  the  sound  prin- 
ciples in  which  we  were  instructed  in  our  youth. 
All  the  aspects  of  the  vast  organisation  which  I  have 
described  prove  this. 

The  producer  binding  down  the  consumer,  con- 
trolling trade,  and  finally  dominating  finance  ; 


132    THE  RULING  CASTE  IN  GERMANY 

production  becoming  the  aim  and  object  and  the 
chief  duty  of  a  powerful  nation.  Production,  not 
regulated  to  meet  the  known  requirements  of  the 
market ;  but  a  constant  striving  after  new  markets, 
creation  of  new  markets,  and  seizure  by  cunning  or 
by  force  of  existing  markets,  in  order  to  find  outlets 
for  floods  of  over-production.  A  huge  amount  of 
capital,  borrowed  capital,  is  locked  up  in  construc- 
tion work,  in  factories,  in  warehouses,  in  docks  and 
in  machinery.  That  capital  may  well  be  termed 
"  stationary."  The  other,  or  floating  capital,  which 
is  constantly  being  turned  over,  takes  the  form  of 
raw  material,  and  the  work  of  converting  it  into 
the  finished  article. 

Once  speed  of  production  slackens  the  interest 
on  "  stationary "  capital  is  threatened,  for  such 
capital  has  no  value  other  than  that  which  it  pro- 
duces. Of  what  value  is  a  factory  which  cannot 
turn  out  work  ?  Conversely,  if  manufactured  goods 
accumulate  in  the  warehouses,  floating  capital  is 
threatened.  Storage  charges  mount  up,  whilst  the 
cost  of  the  raw  material  and  of  wages  remains  the 
same. 

Stock,  as  it  accumulates,  must  be  sold  off, — and 
therefore  competition  must  be  strangled, — and  to 
that  end  it  must  be  sold  cheap  and  in  quantity.  The 
markets  must  be  swamped  with  it,  so  that  the 
adversary  may  have  nowhere  to  turn ;  and  to  effect 
that,  production  must  be  still  further  increased. 

One  of  the  largest  manufacturers  of  Frankfurt- 


CONQUEST  BY  TRADE  AND  WAR     133 

on-the-Maine,  a  prince  of  aniline -dye  makers, 
remarked  a  short  while  ago  to  an  Italian  manu- 
facturer :  "I  would  sell  at  a  loss  for  ten  years 
rather  than  lose  the  Italian  market,  and  if  need  be 
I  would  throw  in  all  that  I  have  made  in  the  past." 
Excellent,  no  doubt,  if  things  were  not  in  fact 
working  in  a  vicious  circle. 

Moreover,  one  can  no  longer  choose  whether  to 
slow  down  or  increase  the  speed  of  production, 
when  a  whole  great  nation  has  been  made  to  undergo 
a  veritable  social  upheaval,  and  in  one  generation 
has  reduced  its  agricultural  population  by  one -half, 
while  throwing  ten  millions  of  its  people  into  manu- 
facture and  trade. 

This  crowd  of  industrial  workers  must  not  be  left 
in  the  lurch,  and  at  all  costs  work  must  be  found  for 
it,  and  money  to  pay  its  wages. 

Lastly,  and  this  is  the  motive  most  often  pleaded, 
though  it  is  clear  that  it  is  not  by  any  means  the 
only  one,  by  export  of  goods  and  by  overseas  trade 
alone  can  the  Germans  keep  the  rate  of  exchange 
level  and  pay  for  the  goods  they  import  in  excess  of 
those  they  export. 

It  is  essential  to  their  manufactures  that  they 
should  import  raw  material,  more  still  is  it  essential 
to  import  food-stuffs,  since  they  are  able  only  to 
produce  food  for  80%  or  85%  of  their  people,  and 
15%  or  16%  must  be  obtained  from  abroad. 

So  much  for  continuity.  Now  let  us  consider  the 
question  of  continuance. 


134    THE  RULING  CASTE  IN  GERMANY 

Can  production  be  indefinitely  increased  ?  Yes, 
so  long  as  new  and  lucrative  markets  can  be  found. 
No,  if  the  finding  of  new  markets  means  continual 
and  continued  sacrifice.  The  sacrifices  may  be  such 
as  to  make  it  essential  to  succeed  without  delay. 

Take  such  a  case  as  this  :  Vast  expansion  of 
trade  over  the  whole  world,  but  with  it  a  rise  in 
prices  on  the  home  market.  Would  not  a  time  come 
when  it  would  be  impossible  to  maintain  the  dif- 
ference in  prices  between  the  home  and  the  foreign 
market  ?  How  could  the  difficulty  be  got  over 
without  destroying  the  export  trade  ?  Only  by 
seeking  markets  in  which  there  would  be  little 
competition,  or  making  an  end  of  competition, 
crushing  one's  rivals  and  becoming  masters  of  the 
situation,  and  therefore  in  a  position  to  raise  prices 
to  a  figure  which  should  not  only  be  profitable,  but 
highly  remunerative. 

Germany  had  got  so  far  in  the  direction  of  econo- 
mic conquest  that  she  could  neither  draw  back  nor 
even  go  slow.  It  is  not  enough  to  say,  as  people 
often  said  before  the  war,  and  many  times  since, 
that  her  economic  crises  were  due  to  growth.  If 
so,  her  case  would  only  be  that  of  England  and  the 
United  States,  the  other  great  industrial  nations. 
Hers  is  quite  different.  She  has  laid  herself  out  to 
dominate  the  world's  trade,  to  corner  raw  material, 
to  regulate  output  and  prices. 

Well,  her  economic  policy  has  gone  back  on  her. 

The  main  fact,  the  essential  fact,  whose  meaning 


CONQUEST  BY  TRADE  AND  WAR     135 

must  be  clearly  grasped,  is  this  :  the  conditions 
under  which  she  started  upon  her  trade  campaign 
do  not  permit  of  a  prolonged  struggle.  Facts  prove 
it.  Only  by  raising  prices  at  home  have  the  mine 
owners,  iron,  electrical  and  other  manufacturers 
been  able  to  keep  their  prices  down  on  foreign 
markets,  and  although  this  does  not  altogether 
apply  to  certain  of  the  chemical  trades,  notably  the 
colour  trade,  which  they  have  held  firmly  for  a  long 
time,  yet  they  have  to  watch  unceasingly  lest  foreign 
manufacture  should  threaten  their  pre-eminence, 
or  even  shake  itself  free  of  their  control. * 

Those  who  stand  up  for  the  "Kartel"  system 
claim  that  the  object  is  to  level  prices  in  the  interests 
of  buyers  everywhere,  and  to  prevent  fluctuations  ; 

1  M.  Lombard!,  an  Italian  engineer,  calls  attention  to  the 
following  characteristic  fact  :  Near  Milan  in  particular  there  are 
big  calico  printing  works.  Italian  firms  which  use  aniline  dyes 
were  getting  to  the  end  of  their  supplies.  They  are  dependent 
on  Germany  for  their  fresh  supplies  of  dye.  The  German 
Government  would  only  permit  of  export  if  imports  were  to  be 
received  in  exchange,  but  the  commission  appointed  to  arrange 
matters  bargained  and  bargained,  and  made  delay  after  delay. 
The  exchange  which  Germany  sought  was  Italian  neutrality 
in  the  war,  but  the  Italians  preferred  to  shut  down  rather  than 
be  parties  to  such  pressure. 

Switzerland  and  other  countries  too  may  see  in  that  an 
example  of  how  easily  economic  control  may  become  political 
domination. 

According  to  information  received,  in  April  Germany  allowed 
eighty  tons  of  aniline  dye  to  be  exported  to  Italy.  I  could  not 
ascertain  what  had  been  sent  to  Germany  in  exchange.  Finally 
I  learned  in  May  that  the  eighty  tons  had  never  been  delivered. 
There  was  every  appearance  of  intention  to  deliver,  but  they 
were  in  the  end  held  up  ! 


136    THE  RULING  CASTE  IN  GERMANY 

but  it  is  in  fact  a  general  levelling  up  of  prices  which 
leads  to  increased  cost  of  living.  This  has  been 
much  contested  in  Germany.  Yet  if  to  import 
duties  one  adds  abolition  of  all  competition  it  is 
clear  that  living  must  become  dearer. 

However,  we  may  dispense  with  deductive 
reasoning  ;  we  need  only  compare  the  rise  which 
has  taken  place  in  wages  with  the  cost  of  food-stuffs. 

It  is  among  colliers  that  wages  have  risen  most 
steadily  since  1890,  and  Mr.  V.  Tyszka  has  based  a 
calculation  upon  a  family  of  colliers  in  the  Dort- 
mund district.  He  finds  that  the  average  for  the 
German  Empire  was  826  marks  per  annum  per  head 
in  that  year,  in  1900  it  had  risen  to  1000  marks,  and 
in  1913  to  1505  marks.1 

In  comparing  the  curve  representing  wages  with 
that  representing  prices  we  find  that,  taking  for 
comparison  the  wages  paid  in  1900  and  the  cost  of 
living  in  the  same  year,  and  indicating  each  by  100, 
the  following  have  been  the  figures  up  to  1912  : — 2 

Year. 

1900 
1905 
1910 
1911 
1912 

1  See  Giulio  Fenoglio,  La  Germania  economica  in  Revista  delta 
Societa  commerciali  of  January  31st,  1915,  in  which  he  quotes 
official  German  statistics. 

2  Ibidem. 


Wages  Paid. 

100 

Cost  of  Living. 

100 

93-8 

106-7 

104-1 

121-2 

107-6 

127-0 

116-7 

135-2 

CONQUEST  BY  TRADE  AND  WAR    137 

Certainly  wages,  except  in  1905,  have  risen 
steadily,  but  the  cost  of  living  has  risen  in  far  greater 
proportion.  The  comparison  is  more  striking  still 
if  to  cost  of  living  one  adds  rent. 

Can  anyone  claim  that  that  is  not  a  direct  result 
of  industrial  combination,  coupled  with  tariffs  on 
imports  ?  If  so,  one  more  example  : — 

For  the  past  twenty  years  there  has  been  the  same 
general  movement  in  prices  throughout  Europe — a 
general  rise  up  to  the  year  1890,  then  a  fall  until  the 
lowest  point  was  reached  in  1896,  after  which  a  rise, 
at  first  irregular,  and  then  rapid,  until  the  present 
day. 

But  the  rise  has  been  much  less  in  France  and 
in  England  than  in  Germany. 

Take  100  as  the  average  price  of  the  principal 
articles  of  merchandise  over  the  period  1890-1899 
and  we  find  : — 

1890-1899.  1900-1909.    1910.      1911. 

In  Germany       ..      100         118         128         139 
In  England        ..      100         111         118         122 

If  we  distinguish  between  food-stuffs  and  raw 
materials  for  manufacture  and  apply  the  figure  100 
as  representing  the  average  price  of  the  former  for 
the  years  1899-1900  we  find  :— 

1900-1909.  1910.  1911. 

Germany      ..        108  125  142 

England       ..        101  108  114 

Can  any  doubt  remain  ? 


138    THE  RULING  CASTE  IN  GERMANY 

On  whom  falls  the  weight  of  this  increased  cost 
of  living  ? 

First  upon  the  working  class  and  on  manufac- 
turers who  have  to  buy  raw  materials,  but  above  all 
on  the  trading  classes  and  small  farmers.  For  some 
years  there  have  been  signs  of  increasing  discontent 
among  the  rural  population,  which  has  formed  itself 
into  a  powerful  organisation,  the  Bauernbund,  or 
union  of  small  landowners,  in  order  to  protect  its 
interests  in  face  of  that  of  the  titled  landed  class, 
which  has  its  "  Bund  der  Landwirte." 

In  other  words,  it  is  the  clientele  of  the  feudal 
class  which  is  not  only  becoming  emancipated  from, 
but  combining  against  it.  The  agriculturist  does 
not  suffer  from  the  rise  in  prices,  for  he  is  a  seller  ; 
the  small  countryman  has  little  to  sell,  he  lives  by 
what  his  plot  produces,  and  in  bad  years  has  to  buy, 
and  that  at  no  small  price,  and  he  is  poor;  1910,  a 
wet  year,  and  1911,  a  year  of  drought,  were  disas- 
trous to  hmi. 

In  one  year  the  price  of  potatoes  in  Berlin  rose 
from  3  marks  to  3  marks  50  ;  of  haricot  beans  from 
12  to  18,  of  turnips  from  3  to  12  and  even  15  marks 
per  quintal.1 

During  one  generation  the  rise  in  the  price  of  beef 
has  amounted  to  53-6%,  of  veal  72-9%,  and  of 
pork  41-9%. 

1  See  Blondel,  Lea  Embarras  de  VAllemagne,  Chapters  V.  and 
VI.,  drawn  from  reports  presented  to  the  Reichstag  and  statistics 
of  the  various  chambers  of  commerce. 


CONQUEST  BY  TRADE  AND  WAR     139 

To  realise  what  these  figures  mean  one  must  bear 
in  mind  that  what  man  requires  is  largely  a  question 
of  what  tastes  he  has  developed.  For  instance,  in 
1887-1888  Germany  consumed  at  the  rate  of  8-4 
kilos  of  sugar  per  head,  in  1912-1913  19-2  kilos. 
Germany  has  acquired  a  taste  for  sugar,  and  above 
all  for  meat,  of  which  in  1912  she  consumed  49-5 
kilos,  and  even  52  kilos  counting  imported  meat, 
per  head. 

The  disparity  between  the  rise  in  cost  of  living 
and  wages  becomes  the  more  appreciable  as  a  nation 
grows  more  and  more  to  look  for  comforts  and  the 
good  things  of  this  life. 

It  would  take  many  pages  to  describe  the  change 
in  habits  of  life  and  the  slackening  of  the  bonds  of 
physical  and  material  restraint  which  are  charac- 
teristic of  the  past  twenty  years  in  Germany  ;  even 
the  lower  classes  have  become  accustomed  to  a  life 
of  greater  leisure  and  greater  ease,  and  have  learned 
to  insist  on  it. 

Germany  could  defy  the  masses,  whether  town 
or  country,  with  the  army  behind  her  ;  and,  more- 
over, no  rising,  no  disturbance  even  threatened, 
yet  the  Opposition  won  seven  and  a  half  million 
votes  at  the  1912  election,  as  against  four  and  a  half 
millions  given  on  behalf  of  the  parties  which  support 
the  Government. 

The  socialists  won  110  seats  in  the  Reichstag, 
taking  the  Opposition  parties  as  a  whole  202  seats, 
which  gave  them  a  majority  as  a  result ;  although 


140    THE  RULING  CASTE  IN  GERMANY 

no  internal  trouble  was  feared  a  time  of  serious 
difficulty  was  expected  to  follow  consequent  upon 
the  expiration  in  1917  of  the  treaties  of  commerce. 

Was  there  more  cause  for  satisfaction  abroad, 
for  in  that  direction  the  nation  was  making  its 
great  effort  ? 

Her  whole  industrial,  commercial  and  financial 
organisation,  in  which  each  depends  so  vitally  upon 
the  other,  was  directed  to  the  capture  of  the  foreign 
market,  and  that  could  not  be  abandoned  without 
the  certainty  of  an  appalling  crisis. 

A  superficial  consideration  of  the  figures  might 
well  lead  us  to  think  that  she  had  succeeded  in  her 
ambition.  Her  turnover  has  actually  increased  by 
six  times  in  forty  years.  Her  share  in  the  world's 
trade  in  1870  was  3  milliards  of  marks,  in  1890 
8  milliards,  and  in  1910  18  milliards,  or  in  terms  of 
percentage  7%,  then  10%,  then  12%. 

From  1897  to  1911  the  numbers  of  her  mercantile 
marine,  an  essential  factor  in  international  trade, 
rose  from  8%  to  11%  of  the  non-subsidised  fleets  of 
the  world,  and  such  fleets  represent  70%  of  the 
world's  trading  ships. 

From  1870  to  1911  German  exports  rose  from 
1,300  to  8,100  millions  of  marks,  and  these  exports 
are  mainly  placed  in  Europe. 

Germany  has  largely  conquered  the  European 
market. 

In  1900  her  exports  to  the  rest  of  Europe  already 
exceeded  those  of  England,  the  proportion  being 


CONQUEST  BY  TRADE  AND  WAR     141 

3,700  million  marks  against  3,100  millions.  Ger- 
many's exports  to  the  rest  of  Europe  had  risen  from 
3,700  to  6,100  millions  of  marks  and  England's 
from  3,100  to  4,500. 

She  approaches  England's  output  of  coal,  pro- 
ducing 20%  to  England's  26%  of  the  world's  supply  ; 
she  surpasses  England  in  that  of  iron,  her  share 
being  20%  and  England's  18%. 

Were  these  not  favourable  signs  ? 


6.  WHY  GERMANY  WAS  ALARMED 

Why  should  there  be  so  much  anxiety  among  the 
great  manufacturers  and  mine  owners,  why  has 
such  nervousness  and  almost  feverish  restlessness 
possessed  Germany  during  the  last  few  years  ? 

It  is  that  if  we  look  again  we  shall  see  things 
which  will  negative  our  first  impressions. 

One  may  fall  behind  a  little  and  yet  be  going 
forward,  go  forward  less  far,  and  yet  go  forward  ; 
and  that  is  Germany's  condition  since  1905.  Why  ? 
Well,  it  is  partly  due  to  the  very  operation  of 
trade  conquest  by  Germany,  and  partly  to  the 
revival  of  national  feeling  which  has  in  all  countries 
characterised  the  opening  years  of  the  twentieth 
century. 

In  the  first  place  Germany's  protective  policy 
brought  about  a  reaction  among  her  neighbours. 


142    THE  RULING  CASTE  IN  GERMANY 

Russia,  in  the  period  1882  to  1890,  raised  her  duties, 
Austria  and  France  did  the  same,  and  in  1890  the 
United  States  established  the  famous  McKinley 
tariffs  ;  then  followed  the  British  Colonies,  and 
Germany  suffered  heavily  in  her  tariff  war  with 
Russia  in  1893  and  1894,  and  no  sooner  was  she 
recovered  from  this  than  Canada,  in  1895,  established 
preferential  rates  with  England. 

So  Germany  entered  on  a  foolhardy  system  of  re- 
prisals, and  Canada  countered  by  putting  a  tax  on 
German  goods. 

Count  Caprivi  was  obliged  to  drop  Bismarck's 
policy  and  to  engineer  (1892-1894)  a  series  of 
treaties  on  the  basis  of  low  tariffs  with  Austria- 
Hungary,  Italy,  Switzerland  and  Belgium. 

But  the  pendulum  had  swung  to  its  highest,  and 
even  from  1892  to  1903,  the  years  of  her  most 
dazzling  prosperity,  Germany  began  to  experience, 
now  here,  now  there,  and  all  the  time  increasingly, 
the  challenge  of  those  nations  which  had  hitherto 
welcomed  and  admired  her. 

In  1900  a  new  Chancellor  took  the  reins,  and  Count 
Billow's  1902-1906  tariffs  were  the  outcome  of  a 
specific  alliance  between  the  agrarian  class  and  the 
protectionist  manufacturers  ;  and  from  that  moment 
tariff  war  had  come  to  stay,  not  only  as  an  item 
among  treaty  clauses,  but  as  a  fact  borne  out  by 
the  harshness  with  which  it  was  enforced. 

Into  this  story,  so  full  of  picturesque  episodes, 
I  cannot  enter.  It  was  in  Franco-German  trade 


CONQUEST  BY  TRADE  AND  WAR     143 

dealings  that  the  most  remarkable  state  of  things 
was  revealed.1 

There  is  an  article  in  the  Treaty  of  Frankfurt 
assuring  by  each  to  each  most  favoured  nation 
treatment,  and  the  two  countries  vied  with  each 
other  in  guile,  the  French  provoked  the  Germans 
with  irritating  enactments,  the  Germans  retorted 
with  academic  politeness. 

In  order  to  favour  Swiss  cattle  rather  than  French, 
the  former  were  included  in  a  special  category,  con- 
sisting of  those  reared  at  an  altitude  of  300  metres 
and  having  brown  heads  and  tails.  Again, a  law  would 
be  passed  in  the  Empire  which  one  would  almost 
be  tempted  to  look  upon  as  official  sanction  to  a 
fraud,  did  one  not  sympathise  with  the  Germans' 
marked  taste  for  burgundy  and  claret. 

A  German  importer  of  French  wines  has  the  right 
to  add  49%  of  some  other  wine  without  altering 
the  French  name  showing  where  the  wine  comes 
from.  Though  this  may  only  be  done  once,  and 
he  must,  if  the  purchaser  requires,  state  the  fact, 
the  wine  merchant  takes  good  care  not  to  ask 
questions  when  he  himself  means  to  repeat  the 
process. 

The  Germans,  moreover,  artificially  savour  wines 
with  the  flavour  of  Chambertin  and  other  of  the 
finest  brands,  and  a  certain  big  house  in  Mayence 
supplies  chemically  prepared  bouquets  to  make 

1  See  the  investigations  which  M.  Ajam,  a  French  deputy, 
made  in  Germany  just  before  war  broke  out. 


144    THE  RULING  CASTE  IN  GERMANY 

good  the  loss  by  dilution — bouquets  stronger  than 
nature  produces.  Bordeaux  cannot  do  that !  As 
to  sweetness ! 

In  addition  to  the  tariff  war  one  result  of  German 
economic  policy  has  been  to  favour  re-exportation, 
and  even  the  development  of  certain  manufactures 
in  the  conquered  territory. 

I  have  elsewhere  cited  the  case  of  the  retired  Rot- 
terdam merchant  who  spent  his  fortune  in  buying 
German  steel  plate,  built  ships  with  it  and  sold  them 
back  at  a  big  profit  to  the  Germans  themselves — so 
expensive  are  steel  plates  to  buy  in  Germany  com- 
pared with  their  price  abroad,  notwithstanding 
freight  charges  and  customs  duties. 

That  is  what  dumping  leads  to.  The  instance  I 
have  quoted  is  not  an  exceptional  case,  and  it  goes 
to  show  why  the  campaign  against  dumping,  so 
rigorously  organised  in  England  when  Joseph 
Chamberlain  was  in  office,  was  very  quickly  suc- 
ceeded by  a  period  of  indifference. 

Germany's  peaceful  penetration  and  foreign 
investments  of  capital  have  been  very  useful  to  her. 
By  these  means  she  established  her  manufacturing 
businesses  in  Russia,  though  Russia  has  shown 
signs  of  throwing  off  the  yoke. 

She  often  claims  that  Italy's  splendid  industrial 
revival  is  solely  due  to  her,  though  such  a  claim  is, 
to  say  the  least,  a  very  exaggerated  one  ;  and  her 
seizure,  or  partially  successful  effort  at  seizure  of 
the  trade  of  the  peninsula,  can  have  in  no  way 


CONQUEST  BY  TRADE  AND  WAR     145 

contributed  in  the  sense  that  Germany  claims,  to 
the  reawakening  of  the  Italian  patriotic  spirit  called 
Nationalism.  The  truth  is  that  Italy  opened  her 
arms  to  Germany — economically — after  her  quarrel 
with  France,  following  upon  the  French  military 
occupation  of  Tunis. 

That  was  in  the  days  of  the  policy  of  the  open 
door,  when  the  views  of  Signer  Ellena  carried  weight, 
and  the  famous  doctrine  of  "  natural  products,"  for 
which  Signer  Einandi  is  still  breaking  lances,  came 
into  prominence.  An  industry  is  "  natural," 
according  to  this  doctrine,  when  the  raw  articles 
upon  which  it  depends  are  native  to  the  country, 
and  only  a  "  natural  "  industry  is  worthy  of  con- 
sideration. Well,  under  such  a  doctrine,  what  would 
become  of  the  Belgians  who  have  oil,  but  no  iron 
ore  ;  the  French  who  have  iron,  but  no  oil ;  and  the 
Swiss  who  have  neither,  but  instead  water  power 
and  perchance  something  of  energy  and  intelli- 
gence ? 

The  theory  of  natural  products  guarantees 
neither  the  liberty  nor  the  security  of  the  world. 
It  merely  induces  those  who  are  sufficiently  strong 
to  take  possession  of  countries  possessing  natural 
riches  in  order  to  exploit  them,  and  it  is  something 
very  similar  to  this  that  has  been  going  on  under 
our  eyes.  Therefore  a  smart  reaction  against 
German  aggression  was  observable.  It  is  not  easy 
to  say  just  when  it  began,  but  the  first  years  of  the 
twentieth  century  saw  the  beginnings.  It  counted 


146    THE  RULING  CASTE  IN  GERMANY 

for  a  good  deal  in  England,  with  Mr.  Chamberlain 
in  office,  because  of  his  policy  of  protection,  in  spite 
of  the  fact  that  he  proclaimed  himself  in  favour  of 
an  understanding  with  Germany. 

France  was  perhaps  the  last  to  take  alarm,  if  she 
indeed  actually  did  so.  She  did  not  fail  to  take  note 
of  Germany's  economic  growth,  but  it  did  not 
appear  to  her  to  be  a  danger.  She  rather  saw  in  it 
a  guarantee  of  safety  and  peace.  M.  Raphael- 
Georges  Levy  came  to  that  conclusion  in  the  year 
1898  as  set  out  in  his  writings.1 

The  fact  is  that  France  had  too  few  commercial 
dealings  with  her  great  neighbour  to  be  much 
concerned  with  her  sudden  commercial  expansion. 

She  did  not  put  herself  on  her  guard  until  the 
dramatic  Tangier  incident,  when  she  realised  the 
menace  to  her  peace  and  the  military  preparations 
behind  it. 

There  the  Germans  saw  themselves  thwarted,  their 
adventure  seriously  checked,  as  much  as  a  result  of 
their  own  conduct  as  of  the  change  of  feeling  which 
they  had  provoked. 

Added  to  this  were  other  factors  which  combined 
to  make  them  more  sensitive,  and  threatened  their 
whole  endeavour.  The  more  vital  of  these  factors 
was  the  prodigious  economic  development  and 
competition  of  the  United  States  ;  yet  that  danger 

1  Raphael- Georges  Levy,  in  the  Revue  des  deux  Mondes, 
1898,  L' Industrie  Attemande  (February  15th),  Le  Commerce 
AUemand  (April  15th). 


CONQUEST  BY  TRADE  AND  WAR     147 

was  one  of  the  future  ;  the  immediate  danger  was 
England's  competition,  because  England  competed 
with  her  on  the  European  markets. 

But  how  could  England  be  dangerous  to  Ger- 
many's ambition  since  the  latter  had  already  got 
the  better  of  her  ?  Some  Englishmen  claimed  that 
it  was  a  delusion,  but  the  majority  believed  it,  and 
then  it  was  that  they  began  to  put  forward  all  their 
energies  and  to  give  evidence  of  all  the  resourceful- 
ness of  a  race  which  has  never  been  so  great  as  in 
times  'of  adversity. 

They  set  themselves  to  study  the  applications  of 
science,  they  brought  their  plant  and  machinery 
up  to  date,  they  expanded  and  developed  their 
systems  of  commercial  intelligence. 

Of  rivalry  between  her  and  Germany  the  world 
knows  little  except  as  regards  competition  in  naval 
construction,  but  it  does  know,  and  it  is  clear  enough 
to-day,  that  Germany  is  the  under  dog. 

The  same  position  has  been  hers,  in  the  matter  of 
trade  rivalry  also,  if  all  the  conditions  are  con- 
sidered. Actually  Germany  has  given  way  in  no 
foreign  market,  but  relatively  her  progress  has  been 
slower  than  that  of  England. 

The  export  trade  for  both  countries  for  the  periods 
1890-1903  and  1904H908  in  terms  of  millions  of 
pounds  sterling  are  : — 

1890-1903.  1904-1908.          Increase. 

Germany      ..       225  300  75 

England       ..       282  361  79 


148    THE  RULING  CASTE  IN  GERMANY 

Now  25%  of  England's  trade  during  the  above 
periods  consists  of  goods  in  regard  to  which  the  fact 
of  re-exportation  is  not  taken  into  account,  and  to 
this  must  be  added  shipbuilding  and  mercantile 
freights.  A  large  amount  of  the  German  export 
trade  is  carried  by  English  ships,  and  in  this  respect, 
one  of  the  most  important,  England  has  won  back 
her  advantage  in  a  very  marked  manner. 

It  is  useful  to  calculate  the  increase  in  exports 
per  head  of  population  in  order  to  judge  of  the  effect 
produced  upon  the  general  conditions  of  living. 
From  1903  to  1910  the  English  export  trade  rose 
from  £5  10s.  6d.  to  £7  10s.  lid.  per  head  of  popula- 
tion, whilst  during  the  same  period  it  rose  in  Ger- 
many from  £2  14s.  lOd.  to  only  £3  15s.  2d. 

Thus  we  see  that  Germany's  victorious  progress 
became  distinctly  slower  as  soon  as  her  command  of 
European  markets  began  to  give  cause  for  anxiety 
abroad,  and  brought  about  the  revival  of  the  keen 
competition  of  which  I  have  spoken  above.1 

That  indeed  explains  the  press  campaign  in  Ger- 
many, the  violent  and  endless  accusations  and  abuse 
levelled  at  England.  Germany  thought  to  under- 
mine the  foundations  of  British  power  ;  she  found 
Britain  still  as  unshakable  as  of  old  ;  but  thence- 
forth warned,  suspicious  and  on  her  guard. 

A  still  more  serious  difficulty  threatened. 

1  In  spite  of  the  Balkan  war  England's  progress  received  no 
check  in  1913,  her  foreign  trade  reaching  35  milliards  104  millions 
more  or  less  (1911,  21  milliards).  The  Economist,  February  21st, 
1914,  p.  414. 


CONQUEST  BY  TRADE  AND  WAR     149 

The  Imperial  dream,  the  dream  of  the  German 
Empire  since  1899,  had  been  to  be  in  a  position  to 
compensate  for  any  slackening  or  stoppage  of  its 
activities  on  the  European  market,  and  more 
especially  on  markets  outside  Europe,  should  such 
occur,  by  the  acquisition  of  vast  outlets  in  an  im- 
mense country,  once  wealthy,  rich  in  natural  pro- 
ducts, with  promise  of  a  glorious  future — probably 
for  time  without  end — by  laying  hands  on  nearer 
Asia,  from  Konia  to  Bagdad,  from  Bagdad  to 
Bussrah  and  the  Persian  Gulf. 

On  that  side  at  least  they  would  not  run  up 
against  a  brick  wall. 

Thej\  had  only  to  obtain  a  preponderating  in- 
fluence over  the  Balkan  nations,  and  that  should  be 
Austria's  job,  Germany  herself  would  see  to  getting 
what  she  wanted,  amounting  indeed  to  complete 
submission  from  the  Sultan  of  Turkey.  She  would 
sit  by  the  bedside  of  the  sick  man  of  Europe  and 
lie  in  wait  to  secure  his  heritage,  then  by  way  of 
Albania  and  Salonica  she  would  reach  the  ./Egean 
Sea  and  open  up  Mesopotamia  by  means  of  railroads 
which  Germany  would  control  and  the  Turks  should 
pay  for.  What  a  grandiose  perspective  ! 

In  that  direction,  in  1903,  success  seemed  within 
her  grasp.  A  German  company  set  to  work  to  lay 
the  Haidar-Pascha  to  Konia  and  Angora  railroad  : 
a  final  concession  for  the  Bagdad  railway  was  granted 
on  March  5th,  1903,  to  Herr  Gwinner,  of  the 
Deutsche  Bank,  and  to  the  German  Anatolian 


150    THE  RULING  CASTE  IN  GERMANY 

Railway  Company,  with  interest  guaranteed  at 
17-5  francs  per  kilometre  per  annum.  But  Germany 
could  not  find  the  money,  and  it  was  necessary  to 
suggest  to  France  and  England  the  floating  of  a 
syndicate.  France  would  have  agreed,  but  the 
opposition  of  England  and  Russia  put  a  stop  to  it. 

The  German  Company  found  itself  incapable  of 
starting  work. 

At  the  same  time  England  strengthened  her  hold 
on  the  Persian  Gulf  at  the  place  decided  upon  as 
the  railway  terminus. 

Next,  in  1907,  England  and  Russia  agreed  between 
themselves  as  to  the  zones  of  influence  which  each 
should  have  in  Persia,  and  undertook  to  build  a  trans- 
Persian  railroad  running  parallel  with  the  Bagdad- 
Bussrah  line,  linking  up  with  Central  Europe  by 
way  of  Batoum,  and  with  India  by  way  of  Chabriz. 

Germany  realised  that  she  must  hurry  things 
forward  at  all  costs,  when  suddenly  the  Balkan 
League  was  formed  against  Turkey.  Salonica  fell 
into  the  hands  of  Greece ;  Servia  was  seeking  a  way 
to  the  Adriatic  and  was  also  blocking  the  road. 
Servia  yielded  to  threats,  but  the  Treaty  of  Bucharest 
left  her  larger  than  before,  firmly  resting,  as  it 
seemed,  on  Greece  on  the  one  hand  and  Roumania 
on  the  other. 

What  would  happen  if  she  had  time  to  pull  herself 
together,  to  establish  herself  firmly  ? 

We  know  from  Signor  Giolitti's  revelations  that 
the  Central  European  allies  wanted  war  in  1913, 


CONQUEST  BY  TRADE  AND  WAR     151 

a  whole  year  before  the  assassination  of  the  Arch- 
duke, heir  to  the  Austrian  throne,  at  Sarajevo,  which 
was  the  pretext  they  seized  upon  for  the  war  of  1914. 

Already  in  1913  things  were  going  badly.  In 
view  of  the  fact  that  the  time  for  renewal  of  the 
commercial  treaties  would  fall  due  in  1917,  Russia 
openly  announced  her  intention  of  revoking  the 
advantageous  terms  accorded  to  Germany  by  Count 
Witte  after  the  Manchurian  war. 

Germany  would  no  longer  be  able  to  send  corn 
into  Russia  duty  free,  and  with  the  assistance  of 
her  famous  bonuses  on  exports  undersell  the 
Russian  corn-growers  on  their  own  markets  ;  and, 
moreover,  it  was  universally  agreed  that  this  clause 
in  the  treaty  had  been  one  of  the  chief  factors  in 
the  agricultural  prosperity  of  the  eastern  districts 
of  Germany. 

Not  only  was  a  set-back  to  agriculture  threatened, 
but  it  might  even  be  ruined  if  the  Russian  Govern- 
ment put  into  force  its  decision  to  forbid  the  emigra- 
tion of  250,000  Polish  labourers  who  went  across 
the  border  each  year  to  cultivate  the  German  soil 
and  returned  to  their  Russian  homes  for  the  winter. 
Thanks  to  these  very  labourers  Germany  was  able 
to  flood  the  Russian  market  with  farm  produce 
cultivated  by  Russians  in  Germany.  To  keep  them 
away  was  to  pass  sentence  of  death  on  German 
agriculture.1 

1  These  workpeople  were  taken  unawares  whilst  in  Germany 
by  the  declaration  of  war.  It  is  they  and  the  people  deported 


152    THE  RULING  CASTE  IN  GERMANY 

The  land  would  have  to  lie  fallow.  There  would 
be  no  farm  produce,  no  home-grown  supplies. 
Germany  would  have  to  rely  entirely  on  imports 
from  abroad,  without  having,  as  England  has, 
command  of  the  sea. 

Prophets  of  ill-omen  became  more  numerous. 
They  pictured  with  consternation  the  exhaustion 
of  iron  ore  in  the  mines  of  Germany  and  Luxem- 
bourg. They  explained  that  in  1940  the  mineral 
resources  of  Luxembourg  would  be  exhausted  ;  that 
by  1950  Germany  would  produce  no  more  iron  ore, 
whereas  the  Briey  district,  opened  up  soon  after 
1880,  would  ensure  a  brilliant  future  for  the  French 
ironmasters. 

If  the  French  were  to  put  permanent  difficulties 
in  the  way  of  the  exchange  of  their  iron  for  Ger- 
many's coal,  what  would  become  of  business  in  the 
Rhine  provinces,  in  Westphalia  and  Silesia. 

Millions  of  hands  would  be  thrown  on  the  streets  ; 
there  would  follow  a  commercial  catastrophe 
without  parallel. 

That  is  the  fearful  nightmare  with  which  this 
powerful  country  was  beginning  to  be  haunted  in 
the  midst  of  her  prosperity  and  whilst  at  the  acme 
of  her  power. 

Is  it  necessary  to  draw  conclusions  ? 

Threatened    by    no    one,    Germany   felt   herself 

from  the  invaded  provinces  who  are  at  present  employed  in 
doubling  the  amount  of  land  under  corn  and  potatoes.  In  thie 
way  Germany  has  for  the  time  being  solved  the  problem  of  how  to 
obtain  practically  unpaid  labour. 


CONQUEST  BY  TRADE  AND  WAR     153 

menaced  on  all  sides.  She  claimed  to  be  fighting 
for  very  existence,  and  she  spoke  truth.  Her 
manufacturers,  financiers  and  statesmen  had  dragged 
her  so  deeply  and  by  such  methods  into  a  war  of 
economic  conquest  that  she  could  not  withdraw. 
The  methods  employed  were  now  working  against 
her. 

Without  having  entirely  miscarried,  victory  was 
clearly  beyond  her  grasp.  Must  she  wait  the  inevit- 
able crash,  the  stoppage  of  trade,  the  downfall  of 
her  credit,  the  misery  which  must  overwhelm  her 
people,  and  the  fury  which  would  perhaps  possess 
them  in  consequence  ? 

Would  not  such  a  state  of  things  make  war 
inevitable  sooner  or  later,  and  was  it  not  better  to 
make  war  whilst  there  was  most  likelihood  of  its 
ending  rapidly  and  victoriously  in  her  favour  ? 

And  then,  the  war  won,  would  not  justice  be  on 
the  side  of  the  victor,  as  Maximilian  Harden  has 
said? 

What  followed  is  common  knowledge. 


INDEX 


"  Adelskette,"  32 
Agadir  affair,  31,  87 
Ajam,  M.,  143  n. 
Attgemeine  Elektrizitatt  Qeaett- 

schaft,  115 

America,  South,  German  popu- 
lation of,  101,  104-5 
America,  United  States  of.  See 

United  States  of  America 
American  Standard  Oil  Trust, 

128 
Andrillon,   Captain,   L'Expan- 

sion  de  VAUemagne,  63 
Aniline     dye     trade,     132-3, 

135  n. 
Argentine  market,  conquest  of, 

by  Germany,  108 
Austria,  80-3,  107  ;   economic 

relations  with  Germany,  107, 

129,  142 

Bagdad  Railway,  149-50 

Bale,  101 

Balkan  League,  150 

Balkan  nations,  Germany's 
plans  for  securing  domina- 
tion of,  149 

Bank  of  England,  55 

Bank  of  France,  55 

Bauernbund,  138 

Bavaria,  decrease  of  birth-rate 
in,  99 

Bebel,  66,  70 

Behring,  59 

Belgium,  5-1  ;  violation  of 
neutrality  of,  by  Germany, 
60  ;  German  domination  in, 


before  the  War,  101,  104  n., 
107,    129;     German    tariffs 
with,  142 
Berne,  101 

Berlin,  Academy  of,  73 
Berlin,  rise  in  food  prices  in,  138 
Berliner  Tageblatt,  116n. 
Bernhardi,  General  von,  47-51 
Bieberstein,  Marschall  von,  83 
Bismarck,  Prince  Otto  von,  32, 
51,  84,  90,  91,  108 ;   charac- 
ter and  policy  of,  33-7,  40-1, 
87  ;   retirement  of,  89 
Blondel,     Lea     Embarroa     de 

VAUemagne,  66 
Brahmins,  26 
Branly,  59 
Brazilian  market,  conquest  of, 

by  Germany,  108 
Briey  district,  iron  ore  in,  152 
British    Petroleum    Company, 

128 

Bucharest,  Treaty  of,  150 
Biilow,  Count  von,  tariffs  of, 

142 

Bund  der  Industriellen,  109-10 
Bund  der  Landwirte,  138 

Calvinism,      compared      with 

Lutheranism,  68 
Canada,  tariff  measures  of,  142 
Caprivi,  Count,  90,  94,  112 
Caste,  ideology  of,  23-75 
Chamberlain,  Houston  Stewart, 
The  Foundations  of  the  Nine- 
teenth Century,  47,  49,  56-8, 
61,  68 


155 


156    THE  RULING  CASTE  IN  GERMANY 


Chamberlain,  Joseph,  Tariff 
policy  of,  144,  146 

Chilian  market,  conquest  of,  by 
Germany,  108 

Colbert,  35 

Constantinople,  German  in- 
fluence in,  83 

Darwin,  49 

Delaisi,  La  Force  Attemande, 

117 

Denmark,  51,  111 
Deutsche  Bank,  128 
Diskonto  Gesellschaft,  119 
Droysen,  51 
Dumping,  104-5,  144 
Diisseldorf,  Centralverbund  of, 

107,  129 

Economist,  quoted,  148  n. 

Edward  VII,  King,  83 

Einandi,  Signor,  145 

Ellena,  Signor,  145 

England,  85,  86,  107,  142  ; 
view  in,  of  the  causes  of  the 
War,  27,  81  ;  German  en- 
mity towards,  48,  52,  54,  62, 
66  ;  proposal  of,  regarding 
limitation  of  armaments,  83  ; 
policy  of  Kaiser  William  II 
towards,  92 ;  mercantile 
marine  of,  95  ;  trading  total 
of,  in  1911,  98;  birth-rate 
in,  99  ;  dumping  of  German 
goods  in,  104,  144  ;  rise  in 
cost  of  living  in,  compared 
with  Germany,  137 ;  ex- 
ports of,  compared  with 
those  of  Germany,  140-1, 
147-8  ;  agreement  of,  with 
Russia  regarding  Persia,  150; 
opposition  of,  to  Bagdad 
Railway  scheme,  160;  Eng- 
lish constitution  taken  as  a 
model  for  Prussian  adminis- 
trative reform,  71 

English,  the,  ideas  of  right  of, 
60 


Essen  Coal  Syndicate,  Govern- 
ment assistance  to,  109 

Eucken,  45,  81 

European  Petroleum  Union, 
128 

European  War,  the ;  Ger- 
many's victory  and  her 
terms  of  peace  predicated  by 
Ostwald,  55-6  ;  Germany's 
reasons  for  entering  upon, 
79-87 

Formic  Acid,  manufacture  of, 
controlled  by  Germany,  105- 
6 
Fouillee,     Id4e     Moderne     dea 

Droits,  50 

France,  27,  59,  66,  82,  85,  146, 
152  ;  war  with,  a  necessity 
of  German  Imperialism,  48  ; 
socialism  in,  70  ;  policy  of 
Kaiser  William  II  towards, 
92 ;  birth-rate  in,  99  ; 
German  measures  for  the 
economic  conquest  of,  103-4, 
105-6,  107,  129,  143  ;  finan- 
cial system  compared  with 
that  of  Germany,  108,  117  ; 
banks  of,  112-3 ;  rise  in 
cost  of  living  in,  compared 
with  Germany,  137  ;  and  the 
Bagdad  Railway  scheme,  150 
French,  the,  ideas  of  right  of, 

60 

Frankfurt,  Treaty  of,  143 
Frankfurter  Zeitung,  104 
Frederick  the  Great,  61 
Freytag,     Gustav,     Soil    und 
Haben,  41 

Geneva,  102 

German  Anatolian  Railway 
Company,  150 

German  White  Book,  omission 
of  Tsar's  telegram  from,  81 

Germany,  spread  of  Pan- 
German  ambitions  in,  8-9, 
47,  51-3,  63-7,  74,  81,  82; 


INDEX 


157 


composition  and  ideology  of 
governing  caste  in,  9-10, 
27-42,  87-9;  socialists  in, 
29,  62,  65-7,  70,  139; 
unanimous  support  of  the 
War  in,  29,  63-7,  88-9; 
philosophers  of  Imperialism 
in,  44-63  ;  suggested  reasons 
of,  for  going  to  war,  79-87  ; 
industrial  expansion  of,  37- 
41,  94-100,  140-1,  147-8; 
glorification  of  the  "  State  " 
in,  70-4,  89  ;  ends  in  view 
in  entering  on  the  War,  87- 
94;  decrease  of  birth-rate  in, 
99  ;  plan  of  commercial  con- 
quest, 100-11  ;  financial 
system  of,  112-25  ;  obstacles 
to  success  of  policy  of,  126- 
41  ;  rise  in  wages  and  cost  of 
living  in,  136-9  ;  reasons  for 
alarm  of,  concerning  future 
economic  development,  141- 
52 

Giolitti,  M.,  80,  150 

Gneist,  71 

Gobineau,  46,  57,  81 

Goethe,  73 

Guyot,  Yves,  117 

G winner,  Heir,  149 

Haeckel,  preaching  of,  in  the 
Monistenbund,  45 

Hague  Conference  of  1907, 
83 

Haidar-Pascha  railroad  to 
Konia  and  Angora,  149 

Halle,  von,  52 

Halske  (electrical  firm),  115 

Hamburg,  proposed  transfer- 
ence of  the  European  money 
market  to,  55 

Hammurabe,  93 

Harden,  Maximilian,  153 

Hegel,  73 

Henry,  Prince,  mission  to 
South  America,  109 

Holland,  51,  52,  73 


Iron  trade,  104-5,  107,  126-7, 
129-30,  152 

Italy,  58,  59 ;  dumping  of 
German  and  Austrian  goods 
in,  105-7 ;  Germany's  at- 
tempt to  bargain  for  neu- 
trality of,  135  n.  ;  low 
German  tariffs  with,  142 ; 
control  of  trade  in,  by  Ger- 
many, 144-5 

Jaures,  62,  70 

Jellinek,  C.,  The  Modern  State 

and  its  Laws,  71-2 
Jonescu,  Take,  80 
Junkers,  the,  34-5 

Kaftan,    Professor,    on    "  The 

German  God,"  73 
Kant,  59,  70 
Kartel  system,  129,  135 
Klein,  General,  85 
Kultur,  meaning  of,  72-3 

Lamprecht ;       Zur     Jungsten 

deutschen  Vergangenheit,38n., 

52 

Lasson,  Professor,  73 
Lausanne,  102 
Leibnitz,  70 
Lenis,  60 

Levy,  Raphael-Georges,  146 
Lichtenberger,    Germany    and 

her    Evolution    in    Modern 

Times,  38  n.,  43,  95 
Liebig,  59 
Liebknecht,  89 
Liefmann,  107  n.,  129 
Lombardi,  M.,  135  n. 
London,  proposed  transference 

of  European  money  market 

from,  55 
Luther,  89 
Lutheranism,  character  of, 

67-8 
Luxembourg,  mineral  resources 

of,  152 


158    THE  RULING  CASTE  IN  GERMANY 


Mannesmann  brothers,  100 

Marconi,  59 

Mexico,  commercial  penetra- 
tion of,  by  Germany,  108 

Might  is  right,  doctrine  of,  81 

Mommsen,  51 

Monge,  60 

"  Monistenbund,"  45,  53-4, 
56 

Moniatische  Sonntagspredigten, 
54 

Morocco,  expedition  of  bro- 
thers Mannesmann  to,  100 

Napoleon,  28,  32 

"  Natural  Industries,"  doctrine 

of,  145 
Niebuhr,  51 
Nietzsche,  45-6,  50,  57,  67,  81 

Ostwald,  Professor  William, 
45,  94,  1 16  n.,  53-6 

Pasteur,  59 

Paulsen,  60 

Persia,  agreement  of  England 
with  Russia  concerning,  15  n. 

Petroleum  market,  128 

Poincare,  59 

Possehl,  Herr  E.,  lecture  of, 
on  the  effect  of  a  war  on 
German  industry,  85 

Preziozi,  La  Germania  a  la 
Conquista  dell"  Italia,  104  n. 

Prussia,  35-6,  69,  70;  capi- 
talists in,  38  ;  administra- 
tive reform  in,  71  ;  decrease 
of  birth-rate  in,  99 ;  col- 
lieries owned  by,  109 

Pufendorf,  70 

Ranke,  51 

Reimer,  61 

Ridolfi,     R.,     La     siderurgia 

Italiana  e  la  protezione  doga- 

nale,  106  n. 
Rdntgen,  59 


Rotterdam  merchant,  instance 
of,  144 

Russia,  30,  66,  80,  111  ;  com- 
mercial relations  with  Ger- 
many, 108,  112,  151,  agree- 
ment of,  with  England 
regarding  Persia,  150  ;  con- 
trol of  manufactures  in,  by 
Germany,  144 ;  opposition 
of,  to  Bagdad  Railway 
scheme,  150 

Salonica,  150 

Saxony,  decrease  of  birth-rate 
in,  99 

Schnaebele  incident,  87,  92 

Servia  and  the  Balkan  League, 
150 

Siemens  (electrical  firm),  115 

Solvay,  King  of  the  Soda 
market,  105 

Sombart,  Der  Moderne  Capi- 
talismus,  38  n. 

Spencer,  Herbert,  25 

Steel-plate  industry,  144 

Stein,  L-udwig,  66 

Stuttgart,  socialist  congress  at, 
66 

Switzerland,  73-4,  96,  104,  142; 
suggested  annexation  of,  to 
Germany,  51-2 ;  economic 
enslavement  of,  by  Germany, 
101-2,  107,  116,  127,  129 

Sybel,  51 

Tangier  incident,   31,   87,  92, 

146 

Tariff  war,  142-4 
Thiers,  89 
Treitschke,  Heinrich  von,  33, 

51,  67 
Tunis,  French  occupation  of, 

145 
Turkey,  Germany's  plans  for 

securing  the  domination  of, 

82-3,  149 
Tyszka,  V.,  136 


INDEX 


159 


United  States  of  America,  81, 
86  ;  German  population  of, 
98,  100-1  ;  economic  com- 
petition of,  with  Germany, 
142,  146 

Varzin,  paper  mills  set  up  by 

Bismarck  at,  40 
Vorwdrts,    suppressed    article 

from,  quoted,  28-31 

Waxweiler,  M.,  La  Belgique 
Neutre  et  Loyale,  104  n. 

Wiener  Bank,  128 

William  I,  German  Emperor, 
84,  89,  93 


William  II,  German  Emperor, 
40,  50  ;  WeUpolitik  of,  83-4  ; 
ambitions  of,  89-93  ;  journey 
of,  to  Jerusalem,  109 

Windelbund,  45 

Wines,  Franco-German  trade 
in,  143 

Witte,  Count,  151 

Wittelabach  (cruiser),  launching 
of,  at  Wilhelmshaven,  83 

Wolff,  70 

Wolfmann,  61 

Wundt,  45,  59 


Zurich,     canton    of, 
population  in,  101 
Zwingli,  68 


German 


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